Today’s Trading Plan: Head Fake Leads to Potential Selling

Technical Outlook:

• Plenty of back and forth on Friday’s intraday price action, but ultimately SPX finished lower, and below the previous day’s lows. 
• Good chance that the 50-day moving average comes into play today at around 2100. 
• Ultimately the bears need to push price below Tuesday’s lows at 2099, while the the bulls cannot settle for anything less than new all-time highs. 
• For the bearish case to really pick up momentum, a break below the previous higher-low would need to occur below 2067. 
• VIX not moving all that much, but it did rise another 4% to 13.84. 
• T2108 (% of stocks trading above the 40-day moving average) continues to collapse as it dropped another 11% down to 37.47% and the lowest closing reading since January 6, 2015.That is significant. 
• A very noticeable head and shoulders pattern forming on the SPX 30 minute chart. A break below Thursday’s lows would confirm this. 
• On the weekly SPX chart, you have a nice breakout two weeks ago, but last week, it confirmed the breakout head fake, and now looks to break below the ascending triangle that has formed in 2015. 
• Futures overnight have been a bit wild after steadily climbing higher, a wave of selling ensued during European trading hours. 
• Volume was strong on Friday and on par with what we saw during Tuesday’s sell-off. 
• The problem with the bulls making new all-time highs during the course of 2015 so far, is that once they are established, nothing else happens; there is no rally that sees a rapid expansion in price. 
• Instead the all-time highs have been quickly sold off by the market in general.
• USO in a bull flag pattern that would break out of the pattern with the slightest of gains today. 
• The market doesn’t care about the economy nor earnings. That is not what is driving it. The market only cares about what the Fed is doing to keep equities propped up. 

My Trades:

• I added one new short position on Friday. 
• I did not close out any trades on Friday.  
• 20% short / 80% cash. 
• Remain long: SDS (Ultrashort ETF) at 19.90.
• I’ll consider adding 1-2 new depending on the direction and strength of the market. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: