Today’s Trading Plan: Hard Bounce, Take Two

Technical Outlook:

• A disaster yesterday for the bulls as the SPX was trading 55 points higher at one point (nearly 3%), only to sell off in the afternoon, most notably in the final hour of trading to finish the day 25 points lower (-1.35%)
• The biggest achievement for the bulls would be if they could avoid in the coming days and weeks, a break of 1820 – the lows of October 2014 sell-off. 
• There is absolutely no denying this market is due for a bounce. The problem with trying to front run a bounce in this market is that it could still sell-off a substantial amount and even do so intraday and shake you out of your positions. Better to wait for market to turn higher first. 
• After seeing yesterday’s sell-off, you have to remain very guarded in your long positions and trades for another potential sell-off to occur. 
• Despite the sell-off yesterday, the VIX still dropped 11.6% down to 36. 
• T2108 (% of stocks trading above the 40-day moving average) is at levels that haven’t been seen since the Great Recession bottom of March 2009. 
• 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. 
• SPY volume levels still very high and elevated. 
• SPX 30 minute chart held by fractions of a point, the lows from yesterday. 
• The current market conditions makes it very difficult to swing-trade positions overnight simply because the risk cannot be contained with the trade. That doesn’t mean that I won’t consider holding a position overnight, but it has to be aligning well technically. 
• It stands to reason at this point that the Fed will not raise rats in September – possibly not even this year.

My Trades:

• Bought SDS yesterday at $23.46 and sold it at $24.87 for a 6% gain. 
• Shorted QQQ yesterday from $100.95 down to $98.71 for a 2.2% gain. 
• Did not add any new swing positions yesterday. 
• Did not close out any swing positions yesterday. 
• 100% cash
• I’m skeptical of the market bounces here simply because it rarely the market ever sees a bottom form off of a monstrous gap higher. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: