Today’s Trading Plan: Can Early Morning Strength Hold

Technical Outlook:

• Heavy move to the downside yesterday that saw a near 2% move unfold on SPX. 
• The 5 and 20-day moving averages were crushed yesterday but the 10-day MA held and price saw a slight bounce off of the MA. 
• Above average volume on the sell-off yesterday, and notable increase from what was seen the day before. 
• VIX saw a 10% pop yesterday quickly pushing it back to the 22 level. 
• Good chance with the doji candle formed on SPX Monday, and the subsequent sell-off yesterday, that we have now established a lower-high. 
• For the bulls to recapture control of this market it stops nothing short of breaking the highs of Monday’s  price action. 
• Pushing the market below 1872 sooner rather than later will be absolutely paramount so that a lower-low may be established on the 30 minute chart. 
• In doing so, on the daily, it represent a break of the 5 day consolidation pattern from last week. 
• T2108 (% of stocks trading above the 40-day moving average) dropped 18% yesterday to close at 24. 
• Despite mentions of talking heads that stocks have decoupled from oil, that is untrue and still the main driver of this market. 
• Short-term, the bulls are in overbought territory. 
• Confirming the head and shoulders pattern on the weekly chart of SPX/SPY will be critical for the bears if they are going to keep the downtrend going. 

My Trades:

• Added two short positions to the portfolio yesterday. 
• Did not close out any  positions yesterday. 
• Currently 20% Short, 80% Cash
• Staying light in this market is absolutely key. Strong bias at this stage is dangerous. Will look to add 1-2 additional short positions today if the market continues to weaken. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: