Today’s Trading Plan: Bears Finding a Backbone

Technical Outlook:

• Bigger than usual trading range for S&P 500 (SPX) yesterday, and biggest sell-off that the market has seen August 2nd. Would have been the biggest since the Brexit sell-off, but the bulls stepped in during the last 10 minutes and goosed the market off of its lows. 
• More importantly, SPX broke the 20-day moving average yesterday for the first time since 6/29, which is flat out amazing. 
• The market appears to be indicating further downside for this market in the coming days. 
• Double top pattern playing out on the SPX 30 minute chart. A move below 2168 would confirm it. 
• Gap on SPDRs S&P 500 (SPY) in play from 8/5 and yet to be filled. 
  
• Volume increased yesterday and just a shade below Friday’s highs. Overall, it is still below recent averages though. 
• CBOE Volatility Index (VIX) saw a sharp rise yesterday, rallying 8.6% to close above key resistance at the 13 level. 
  
• Oil continues to drop, and United States Oil Fund (USO) continues to play out the right shoulder of a much bigger head and shoulders pattern. 
• The difficulty in this market is holding on to a long position for any length in time because of the market’s natural tendency for “mean reversion during mid-July and August trading. 
• SPX attempting to sell off for a second consecutive week, which is something that hasn’t been seen since the 3 week Brexit sell-off (also counting the two weeks that led up to it).
• Janet Yellen speaks at Jackson Hole on Friday. 
• Dow Jones Industrial Average (DJIA) is starting to give more legitimacy to the double top possibilities with yesterday’s sell-off. 
• Overall, August is the worst performing month for the Dow and S&P 500. 
• 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. 

My Trades:

• Sold VMW yesterday at $74.87 for a 3.3% profit. 
• Sold NVDA yesteray at $62.13 for a 0.6% profit. 
• Did not add any new positions to the portfolio yesterday. 
• Added one new long position yesterday. 
• May add 1-2 new swing-trades to the portfolio today. 
• Will consider adding additional short positions to the portfolio as the market warrants it.
• Currently 20% Long / 20% Short / 60% Cash
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: