Today’s Trading Plan: Go Away

Technical Outlook:

• Another day of selling, but half the day’s losses were erased by the dip buyers in the final hour of trading. 
• This continues to be the norm as the dip buyers aren’t in fear of the current sell conditions that we have seen of late. 
• SPY volume on Friday was through the roof and much higher than anything we have seen since 3/10/16. 
• SPX has confirmed the head and shoulders pattern on its 30 minute chart but will see some support around the 2040 area. 
• Last week marked the first time in eleven weeks where SPX finished below the previous week’s trading lows. 
• SPX lost the 20-day moving average on the daily chart, which has served as a nice bounce area previously. 
• The next challenge will be the rising 50-day moving average. 
• Today officially kicks off the “Sell in May, Go Away” theory. Last year the market peaked in May before trending lower the rest of the year.
• Historically the May through October time frame is much weaker than the rest of the year.
• VIX only rose 3.2% on Friday after giving up much of its gains and refusing to  above the base breakout level.  
• T2108 (% of stocks trading above their 40-day moving average, traded 6% lower on Friday to close at 71%. 
• It is very important to be aware of the potential for a strong pullback here and to manage your long position risk accordingly. 
• Yellen’s dovish outlook as it pertains to rate hikes has been, in large part, the reason for the massive rally off of the February lows. 

My Trades:

• Sold SPXU on Friday at $28.56 for a 3.2% profit. 
• Did not add any new positions to the portfolio On Friday.  
• Currently 20% Short / 80% Cash
• Remain Short: IWM at $114.05, IBM at $149.34.
• Will look to add 1-2 new short positions today if the market seeks to push lower. Will flip to the long side if price action can break out of the current trading range. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: