Today’s Trading Plan: Another Day In The Trenches

Technical Outlook:

• Another major gap down following a day in which SPX managed to finish in the green. Today’s gap down takes us well below the August lows. The key will be whether SPX manages to close at that level or above it. 
• It is almost comical at this point that the market, since 12/29 has had absolutely no bounce at all to it. The odds support a bounce in the short-term and despite intraday developments, the bulls keep getting smashed on each attempt. 
• A break below $183 on SPY would confirm the head and shoulders pattern that has been in the works since May of 2014. 
• SPY volume yesterday was dramatically less than what we saw on Friday, but still well above average volume readings. 
• SPX 30 minute chart continues to show no sustained bullish momentum. 
• At this point, the market is really at a bounce or collapse place here with no in between. 
• A dead cat bounce could easily take us up to 2000 in short order on SPX without violating the longer-term bearishness of this market. 
• VIX dropped 3.6% yesterday down to 26.05. 
• T2108 (% of stocks trading above their 40-day moving average) rose 9 points to 9.29%
• Oil continues to weaken overnight as well as China which is the culprit today in the US equities. 
• While it may feel like the market is acting like “2008” again, the fundamental catalysts do not exist for that. Banks are not at the brink of disaster, real estate is not collapsing. Yes, the oil has collapsed, but oil has almost collapsed already 80% from 2014 highs and the market is down 12% from its 2014 highs. I’m not saying that this market is strong…. far from it, I am simply saying that comparing this market to 2008 is not an accurate comparison. 
• The bears, even at these levels are still trying to aggressively short the market, which will ultimately lead to a massive short squeeze. At this point, getting short makes absolutely no sense, and are better off waiting for the relief rally to take place before trying to short this market again. 
• So far this is the worst start to a new year of trading since the Great Depression
• Plenty of gaps exist and waiting to be filled overhead.  

My Trades:

• Added three positions to the portfolio yesterday. 
• Did not close out any existing positions yesterday. 
• Currently 40% long, 60% Cash
• Looking to manage current positions this morning, if the market shows signs of bottoming today, I may add 1-2 new positions, but I will need to see a hard bounce off of the lows of the day. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: