Today’s Trading Plan: April Showers

Technical Outlook:

• SPX had a major sell-off yesterday that saw the index drop back below the 5 and 10-day moving averages. More importantly the 20-day moving average was breached yesterday with close below the MA. 
• SPX close to trading below the lows from last week. It would be a first for the index in the last 11 weeks. 
• SPY volume saw a notable uptick yesterday and close right at average levels. 
• VIX saw one of its biggest moves in a very long time – rising 10.5% to 15.22 and a break of the downtrend off of the February highs. 
• T2108 (% of stocks trading above their 40-day moving average) dropped 6.9% – will need to see further decay to call for a breakdown in the indicator. 
• Most important development yesterday on the chart was the confirmation (just barely) of the head and shoulders pattern on the 30 minute chart of SPX by closing below 2077.
•  Another sell-off today and close below 2059 would result in a negative month for April for SPX – not even considered a possibility just two days ago. 
• Dip buyers were present in the early going for the market yesterday morning, but noticeably absent yesterday afternoon. 
• Commodities, notably Gold, Silver and Crude continue to surge in a major way. 
• Advancers have been incredibly strong of late despite weak or minimal moves from the market as a whole. This is a rare phenomenon. 
• 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:

• Added one new short position to the portfolio yesterday. 
• Currently 30% Short / 70% Cash
• Remain Long: SPXU at $27.67 (Bearish ETF)
• Remain Short: IWM at $114.05
• Will look to add 1-2 new short positions today if the market seeks to push lower. Will flip to the long side if price action can break out of the current trading range. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: