Today’s Trading Plan: Finding Its Footing

Technical Outlook:

• Dead cat bounce started yesterday resulting in one of the year’s best rallies. 
• These bounces, if it remains part of a larger sell-off, can last anywhere between 2-4 days. 
• The VIX is melting away at an incredible rate. Over the last two days, has gone from almost tagging 27, down to 18.75. Yesterday saw a decline of 21.4%. A push back below 20 historically has been where stock prices are deemed more stable. 
• The T2108 (% of stocks trading above their 40-day moving average) rebounded nicely with a 29% move of its own all the way back up to 35.2.
• The 200-day moving average was reclaimed in SPX and Dow yesterday. Still trades significantly below it on the Nasdaq and was rejected at the 200-day MA on the Russell. 
• SPY managed to fill the gap on Monday’s decline. The larger gap left unfilled, of course, is the Friday’s gap following the Brexit vote. 
• SPX managed to break back above the double top confirmation level. 
• Russell 2000 had a solid bounce off of the 1090 level. 
• As price creeps back into the 2050-2090 range on SPX, you have to be concerned with price action giving way again to bearish tendencies. 
• Market is assuming that rate hikes are pretty much off the table for all of 2016. 
• Volume was well above average yesterday, but still dropped for a second consecutive day. 
• Biggest issue for the time being for the bears is that the Brexit vote to leave, may not generate a ton of additional headlines and there is no guarantee, that the politicians, who are against such a move, would even allow it to happen. 

My Trades:

• Added three new long positions to the portfolio yesterday. 
• Did not close out any positions yesterday. 
• 30% Long / 70% Cash
• Cognizant of the fact that the market may run hard into resistance today and ultimately reversing. 
• Bounces like the one tha started yesterday, typically lasts 2-3 days. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: