Today’s Trading Plan: A Needed Bounce

Technical Outlook:

• Major continuation yesterday to the downside, saw SPX shed almost another 2%. 
• Volume fell off from Friday, but was still extraordinarily high on SPY yesterday.
• The biggest phenomenon yesterday was the massive sell-off and the VIX actually pulling back 7.4% to close at 23.85.  
• T2108 (% of stocks trading above the 40-day moving average) shed 32% yesterday to close the day at 27.35. Here are some of my additional thoughts on that indicator reading. 
• /ES Futures gapping up this morning and looking at a big move today. This is overdue at this point considering that SPX has fallen 113 points in just two days. 
• Double top on SPX confirmed yesterday. Ultimately a move that takes price below or near the 1800’s is likely. 
• Dead cat bounces like what we are seeing attempted here this morning, create some of the best rallies intraday, and can go on for 2-4 days before the bulls run out of gas. 
• From a shorting perspective, you want this rally, it brings prices back up to better risk/reward levels. 
• A rally back up to 2050 is very possible today and/or tomorrow. 
• SPX tested and broke the 200-day moving average with no fight from the bulls. 
• Biggest issue for the time being for the bears is that the Brexit vote to leave, may not generate a ton of additional headlines and there is no guarantee, that the politicians, who are against such a move, would even allow it to happen. 

My Trades:

• No swing trades added to the portfolio yesterday. 
• No swing trades closed out yesterday. 
• I remain 100% cash today, looking to add some plays to the portfolio on a market bounce today. 
• Don’t be surprised, in response to a central bank, for a hard bounce to happen this week. Bounces usually last 2-3 days. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: