Today’s Trading Plan: A Hated Rally

Technical Outlook:

• SPX pulled out of its 3-4 day holding pattern and broke out to new all-time highs yesterday. 
• 5-day moving average continues to hold strong. Look for a break and close below the 5-day for signs of short-term weakness. 
• Slight increase in volume yesterday, but still way below recent averages. 
• The trade to the upside can be categorized as the “pain trade” or “climbing the wall-of-worry” – that’s because this rally is hated by most traders. Heck,I don’t like it either, but I trade it because that is what the market is giving us right now. 
• Shockingly, following the Brexit, just a little less than a month ago, SPX now has 2200 in its sights. 
• The market trend-line is clearly starting to flatten out some. 30 point moves on SPX will be much more difficult to achieve.
• SPX 30-minute chart continues to put in higher-highs and higher-lows. Very healthy, but like the daily chart, is starting to flatten out the trend-line some. 
• On the whole the volume continues to diminish following the Brexit vote. 
• VIX Continues its drop, maintaining its move beneath 12 – rare territory for the VIX and has not been achieved in over a year. Though there is a hammer candle that formed yesterday, that could lead to an upside reversal. 
• Significant selling that ultimately rebounded off of the lows yesterday for USO. Still struggling with the 10-day moving average. No clear edge trading oil right now. 
• So far, earnings season hasn’t been the disappointment that many thought it would be. 
• SPX on the weekly chart is attempting to string together its fourth consecutive week in the green. 
• SPX on the monthly chart is attempting to string together its fifth consecutive month in the green. 
• Despite impressive monthly streak, it has been marked with consistent volatility seen most clearly in the Brexit sell-off and rally to new all-time highs. 
• The next three weeks will be the thick of earnings season. Know when your stocks are reporting and plan accordingly. Expect plenty of large moves and for futures to be affected by the reports of FB, AAPL, GOOGL, AMZN and others. 
• At this point, and with the election ahead, I’d expect the market to keep rallying higher. I don’t expect there to be a rate hike between now and the election. To do so would impact the market and thereby the election. I don’t think the Fed wants that, particularly since Trump has indicated that he would replace Yellen. 
• Market is assuming that rate hikes are pretty much off the table for all of 2016. 

My Trades:

• Added two new long trades to the portfolio yesterday. 
• Closed out DIS yesterday at $97.56 for a 2.9% loss. 
• May add 1-2 new swing-trades to the portfolio today. 
• Will consider hedging the portfolio as well with a short position. 
• Currently 60% Long / 40% Cash
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: