My Swing Trading Approach

I didn’t add any new positions to the portfolio on Friday. I will be open to adding another long position this morning but will need to see evidence that the market is willing to bounce (again) off of its lows of the day. But more than likely, I’ll be playing it safe here with price action extremely overbought here.  

Indicators

• Volatility Index (VIX) – Huge bearish engulfing candle pattern on VIX today, which saw another rejection at the 20-day moving average followed by an 8% decline from the previous day’s closing price. VIX closed below 15 for the first time since October 5th of last year. 
• T2108 (% of stocks trading above their 40-day moving average): New Rally highs has the T2108 the most overbought in years, currently sitting at 87%.
• Moving averages (SPX): Currently trading above all major moving averages. 
• RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

Friday’s rally was all about the Financials. It is what propelled the Dow so high, and why Technology and in particular, the FAANG stocks, lagged so much. Healthcare looks poised for a run to new all-time highs while Energy certainly rallied hard as well and came out of its two month basing pattern finally. 

My Market Sentiment

I’m a little skeptical of Friday’s rally, as traditional market leaders were left in the dust, including the FAANG stocks and a host of other major tech stocks. Money was rotating out of them and into Financials, Healthcare, Energy, Materials and Industrials. But for this rally to continue, it will need to include Technology.  

S&P 500 Technical Analysis

Current Stock Trading Portfolio Balance

• 40% Long.

Recent Stock Trades – See My Past Performance Here.