Today’s Trading Plan: Finding A Way Out of the Triangle

Technical Outlook:

• Dip buyers came in on Friday and provided some relative strength for the bulls to finish the week out on. 
• Considering we have had 10 straight weeks of alternating up/down/up/down if this week is to continue that pattern, then we are looking at a finish lower come Friday. 
• Short-term SPX is stuck  trading in a well defined triangle pattern. Typically, this particular one, should resolve to the downside, but I am having some doubts of late. 
• 20-day moving average should be watched closely today. Recent attempt to break it was met with a heavy, sell-off thereafter. 
• FOMC Statement comes out on Thursday, and there is a good chance that it holds the market hostage until then. There’s a good chance we’ll see our share of rumors regarding its outcome throughout the week. At this point, Yellen has played her hand close to her chest. 
• SPX 30 minute chart shows a double top and a double bottom with price trading right in the middle of the two. 
• VIX continues to drop off, this time shedding 4.8% down to 23.20. 
• T2108 (% of stocks trading above the 40-day moving average) climbed 4.5% to 20%. 
• The last 15 minutes of trading of late has turned into a real circus – the biggest moves of the day, and often times by a long shot, is occurring during this time. 
• It is the gaps that are really standing in the way of swing-traders right now. When you have an equal number of monster gap up/down from a day-to-day basis, the penalty for being on the wrong side of the trade is greatly intensified and creates a high-risk environment that is not conducive for overnight holds. 
• 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 to the portfolio on Friday. 
• Closed out SDS on Friday at 22.53 for a 0.5% loss. 
• 100% Cash
• Still very skeptical of the market at this point in time, however, an upside break out of the current short-term triangle may be enough to get me to start adding exposure to the long side again. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: