Today’s Trading Plan: Cue Another Daily Reversal

Technical Outlook:

• SPX pushed lower on Friday despite a rally attempt early on that fell apart. 
• Volume has been very strong over the past two days – which has been missing over the previous two weeks of trading. 
• The gap down on SPY Friday saw the opening and closing price nearly identical which means that despite the losses on the day, the large majority of those losses are happening before the market even opens up. 
• For swing-traders the gains/losses are made overnight night and you have to be willing to hold overnight in order to profit. 
• Somewhat of a bear flag on SPX daily chart that could confirm with a move below 1948 today. 
• Support found at the 20-day moving average on Friday which puts price in the upper range of the Bollinger Band still. 
• Another large gap expected today on SPY. The key early on will be whether the bulls can keep price moving higher or whether the bears use it as an opportunity to reload on their short positions. 
• 30 minute chart definitely shows some support in the 1950-55 range which is where SPX is trying to bounce at today. 
• VIX did not rise hardly at all despite a 30+ point sell-off in SPX, finishing only 5.4% higher at 22.28. 
• T2108 (% of stocks trading above their 40-day moving average) dropped 21% down to 27.8%. Not as significant of a move as we have seen out of it lately either. 
• I don’t expect the Fed at any point this year to raise rates now. Not next month, and very unlikely in the middle of the Christmas season. 
• The large gaps in the market, the record number of stock buybacks, and ETFs that are constantly accumulating/dumping large chunks of stocks, and most importantly the high frequency trading, shows just how illiquid this market has become in recent years. These entities are the most responsible for the massive market swings that stocks incur each day. 
• This market is one that seeks to fill traders with regret, whether it be for selling too early, selling to late, not being long enough, not being short enough. That kind of regret will manipulate you into trading in a manner that will bring ruin upon the capital in your portfolio. 
• Trade nimble, be careful about holding positions overnight, because the volatility is still at extreme levels and much of the daily moves are happening before the market ever opens. 

My Trades:

• Did not add any new swing-trades yesterday. 
• Did not close out any swing-trades yesterday. 
• 100% Cash
• SPX remains range bound again, with last week’s failed breakout. Tilting bearish here, so short positions may offer the best risk/reward as the week moves forward. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: