Today’s Trading Plan: Apple and Fed on Deck

Technical Outlook:

• Another morning sell-off, another afternoon rally. 
• The bears are not holding on to their shorts for long, and the dip buyers are patiently waiting for the afternoon to roll around before jump starting their long positions. 
• Yesterday saw a 10 point pop off of the lows of the day, and 5 points in the final 30 minutes of trading to take SPX from being down over 13 points to only down 3 points on the session. 
• The bulls can’t benefit from this on a day-to-day basis, because the large majority of individual stocks are still trading lower, and the market is too – not to mention they are getting stopped out of positions. Every position that a bear adds is under water by the time the market closes. This creates an extremely difficult trading environment for everyone. 
• Apple earnings are on deck after the bell today – as always this has a huge impact on the market and its general market direction. 
• SPX 30 minute chart shows a potential head and shoulders pattern forming. Confirmation of the pattern would be off of a move below 2076-77 area. 
• Volume fell off hard yesterday and was the lightest reading since 4/14.
• The 20-day moving average is in play here. This has been a strong support MA for the market to bounce off of the past two months. 
• Yesterday formed the notorious “Golden Cross” where the 50-day MA trades above the 200-day moving average. Don’t read too much into this. The last time that happened was on 12/21 – and the market pretty much tanked for two months thereafter. 
• SPX broke the rising trend-line off of the February 11th lows yesterday. 
• VIX popped 6.5%  yesterday but well off of its sessions highs, and unable to break the down trend off of the February highs. 
• Very little movement in T2108 (% of stocks trading above their 40-day moving average) yesterday as it only dropped 2.8% down to 76%. 
• The last time the market saw two consecutive days of selling was on April 5th. 
• SPX has closed above the previous week’s lows for 10 straight weeks. The record is 13 weeks – as you can see, we are in some rare air here, and the likelihood that it persists isn’t very favorable. 
• A break below 2073 on SPX would end the streak. 
• There was relative weakness in the VIX yesterday despite the weakness in Nasdaq. Needs to stay above 13 today. 
• USO continues to pullback here. 
• Heavy news week – Amazon and Apple report earnings, to name a few, followed by Central Banking meetings from the Federal Reserve and Bank of Japan. Finally you have GDP on Thursday. 
• It is very important to be aware of the potential for a strong pullback here and to manage your long position risk accordingly. 
• April has been bullish in nine of the last ten years. 
• Yellen’s dovish outlook as it pertains to rate hikes has been, in large part, the reason for the massive rally off of the February lows. 

My Trades:

• Covered QQQ trade at $108.81 for a 1.4% profit. 
• Added one new short position yesterday. 
• Currently 20% Short / 80% Cash
• Remain short USO at $10.72.
• Will look to add 1-2 new short positions today if the market seeks to push lower. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: