Today’s Trading Plan: An Earnings Beat-Down

Technical Outlook:

• First legitimate sell-off on SPX yesterday since April 7th. 
• SPX finished the day trading below the 5-day moving average. 
• Watch the rising trend-line off of the February 11th lows. Currently the trend-line sits at 2087. 
• A slew of earnings came out last night and this morning resulting in hard sell-offs in Google (GOOGL), Visa (V), Microsoft (MSFT), Starbucks (SBUX), and Caterpillar (CAT). 
• Weakness, as a result of the earnings, is most noticeable on the Nasdaq. 
• Volume increased yesterday from the day prior and still trading below recent averages. 
• On the 30 minute chart, SPX needs to hold 2073 today if it wants to avoid establishing a lower-low. 
• VIX continued its bounce from the day prior – and exhibiting similar bounce tendencies to what we saw back in late July prior to the large sell-off. 
• T2108 (% of stocks trading above their 40-day moving average) showed some signs of weakness yesterday, dropping 8.6% down to 75%. A move today below 70 would likely market a shift in the market’s outlook. 
• It is very important to be aware of the potential for a strong pullback here and to manage your long position risk accordingly. 
• For the bears, they need to get price action back below 2040 on SPX in order to establish a lower-low on SPX daily chart.  
• 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:

• Did not close out any positions yesterday. 
• Added one additional position to the portfolio yesterday. 
• Currently 30% Short / 70% Cash
• Remain long SPXU at $27.51 (short ETF).
• Remain short QQQ at $110.40
• Looking for the market to continue yesterday’s selling. Will cover the short positions, if the market reverses hard. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: