Today’s Trading Plan: Keeping It Going

Technical Outlook:

• Huge rally again for a second day in a row, sending SPX up 56 points over that two-day stretch. 
• Friday’s rally saw SPX get back into positive territory for the year. 
• The 200-day moving average of SPX has now been broken. 
• The rally was far from anything being broad-based. In fact the advancers vs. decliners only held a 1.3 to 1 advantage. Typically in a big rally,  you see numbers of 3 or 4 to 1. 
• Rally was primarily due in part to earnings beats by Amazon, Google, and Microsoft.
• Despite the rally of the past two days and the week prior, the T2108 (% of stocks trading above the 40-day moving average) has completely flat-lined. I am watching for a downside break at this point below 55% (currently at 65%). The flat-lining indicator is a major divergence against this market rally. 
• To add to the mixed signals of Friday’s rally, VIX rallied off of 13.24 to finish at  14.35 and to finish a smidge higher on the day. 
• The current rally is impressive, but with some of the observations mentioned above, there is reason to become more concerned with its ability to maintain the current pace. 
• 30-minute chart suggests some consolidation or even a pullback of some type. 
• Volume dropped off on SPY and was slightly below average on Friday. 
• Downtrend off of the July highs was broken last week too. 
• Ultimately, price on SPX is entering a range that has notoriously been difficult trading for most and one that vacillates consistently within a narrow range. 
• 10-day moving average continues to be a strong barometer of market direction – a close below it would represent a significant market reversal. 
• Essentially there are three resistance levels to watch: 1) Lower channel, range resistance at 2040 as shown below, 2) Declining resistance off of the July highs, which currently sits at 2039, and 3) 200-day moving average which also coincides with SPX’s break even level at 2059.  
• The Fed has never raised interest rates at a point where the market was trading lower on the year. Currently SPX is trading in positive territory heading into Wednesday’s announcement. 

My Trades:

• Sold FB on Friday at $102.23 for a 7.5% gain. 
• Sold TYC on Friday at $36.91 for a 1.5% gain. 
• Sold CVX on Friday at $90.57 for a 0.9% gain. 
• Did not add any new swing-trades on Friday. 
• 30% Long / 70% Cash
• Remain long: DIS at $105.88, MFC at $16.81, MSI at $70.66
• Will look to add 1-2 new long positions today on continued market strength. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: