Today’s Trading Plan: Is There Follow Through On The Intraday Rally

Technical Outlook:

• One of the wildest trading sessions of the past year that saw SPX drop nearly 70 points intraday only to rally 47 points off the lows to close 1.1% down. 
• There is a strong possibility that the market has formed a temporary bottom for now. Perhaps similar to that of what was seen in August 2015. Best case scenario would be a bottom similar to that of September. 
• The massive head and shoulders pattern on the SPY going back to May 2014, saw price broke below the neckline, but quickly rallied, so not confirmation at this point yet. 
• T2108 (% of stocks trading above the 40-day moving average) dropped all the way down to 3.81%, which is lower than the March 2009 bottom, with only two other readings on record being worse 1) October 2008 lows, and 2) 1987 October Market Crash. This is not a reading that is usually reached, and when it does, it leads to a massive bounce thereafter. 
• The Dow and Nasdaq did not take out the August lows, while the Russell broke below it ages ago. 
• A push above 1901 on the 30 minute chart would establish a higher-high on SPX. 
• Oil continues to flounder and trading below $28 still. 
• Volume was extremely high yesterday on SPX and the highest that has been seen since the December Fed announcement. 
• 5-day moving average continues to provide declining resistance on SPX. A rally today could break through that level. 
• If the head and shoulders pattern confirms on the SPY chart, you may ultimately see a move in SPX that goes below 1800’s. 
• At one point yesterday, SPX was down about 12% for the year alone…let me remind you that we are still in January. 
• VIX spiked to over 32 yesterday which was a massive fear pike but relinquished much of those gains to finish only 5.9% higher at 27.59.
• It is almost comical at this point that the market, since 12/29 has had absolutely no bounce at all to it. The odds support a bounce in the short-term and despite intraday developments, the bulls keep getting smashed on each attempt. 
• At this point, the market is really at a bounce or collapse place here with no in between. 
• A dead cat bounce could easily take us up to 2000 in short order on SPX without violating the longer-term bearishness of this market. 
• While it may feel like the market is acting like “2008” again, the fundamental catalysts do not exist for that. Banks are not at the brink of disaster, real estate is not collapsing. Yes, the oil has collapsed, but oil has almost collapsed already 80% from 2014 highs and the market is down 12% from its 2014 highs. I’m not saying that this market is strong…. far from it, I am simply saying that comparing this market to 2008 is not an accurate comparison. 
• The bears, even at these levels are still trying to aggressively short the market, which will ultimately lead to a massive short squeeze. At this point, getting short makes absolutely no sense, and are better off waiting for the relief rally to take place before trying to short this market again. 
• So far this is the worst start ever to a new year of trading.
• Plenty of gaps exist and waiting to be filled overhead.  

My Trades:

• Added four new positions to the portfolio yesterday. 
• Closed out three positions yesterday. 
• Currently 50% long, 50% Cash
• Looking to manage current positions this morning, if the market shows signs of bottoming today, I may add 1-2 new positions, but I will need to see a hard bounce off of the lows of the day. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: