Today’s Trading Plan: Losing Momentum

Technical Outlook:

• Biggest sell-off yesterday since March 8th, as price in one swoop dropped below the 5-day and 10-day moving averages. 
• Two key price levels to watch today – 1) The Friday lows from last week. 2) The lows from March 24th. Particularly, if the latter should break, it would put in a lower-low into the downtrend. 
• Between 2040 and the all-time highs the price action is very congested with plenty of resistance. 
• A break of the March 24th lows would also result in a break of the 20-day moving average which would be something the market hasn’t seen since February 12th. 
• With yesterday’s decline, the market essentially hasn’t declined since March 18th. 
• Should the morning strength begin to fade, it may offer an opportunity to try a starter position to the short-side. 
• However, it is worth remembering just how resilient the bulls have been of late, buying up every dip in sight. 
• Double top has formed on SPX 30 minute chart. 
• Significant bounce in the VIX yesterday rallying 9.2% and breaking the downtrend off of the February highs. 
• T2108 (% of stocks trading above their 40-day moving averages) saw a bigger decline than usual by dropping 5.9% down to 77.5%.
• Yesterday, SPX closed below the 10-day moving average which was the first that has happened since the rally started on February 12th. 
• Even if the market can rebound after yesterday’s sell-off, the technical damage that was incurred suggests that stocks are losing momentum at these current levels. 
• SPY volume picked up a good bit from the previous trading day, but still below recent averages. 
• The market has hardly seen any correction over the last seven weeks – with only one of the weeks resulting in a lower close from the opening price. 
• The downtrend off of the July highs becomes the next testing point for this market as it seeks push through its resistance at 2095 an back into the 2100’s.
• 2100 is also significant because a close above this level potentially jeopardizes the two-year long standing head and shoulders pattern that the market has had in development. A close above 2116 absolutely destroys the pattern.
• April has been bullish in nine of the last ten years. 
• 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 NFLX yesterday at $105.20 for a 2.6% profit. 
• Sold AMZN yesterday at $592.00 for a 1.9% profit. 
• Did not add any new swing-trades yesterday. 
• Currently 10% Long / 90% Cash
• Remain long TLT at $129.52
• Will look to add short or long exposure here today depending on the direction the market decides to take. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: