Today’s Trading Plan: Market Trying To Find Its Home

Technical Outlook:

• S&P 500 (SPX) saw a massive reversal on Friday following an attempt at establishing new all-time trading highs. Despite the breadth and extent of the sell-off, the bears managed to rally SPX back close to break even on the day. 
• SPX is down 3 straight days, but still has yet to manage to even pullback 1% in total during that time. 
• Third straight day of trading for SPX below the 20-day moving average, with the 5-day now crossing below the 20-day MA for the first time since July 5th. 
• SPX could create a lower-low if the bulls can drive price below the August 2nd lows at 2147. 
• There was a 77% increase in the SPDRs S&P 500 (SPY) volume on Friday from the day before and the highest volume reading since July 8th. 
• Sharp reversal on Friday, increases the possibility of a rate hike this year, and the possibility of even two more (though I find the latter very, very unlikely). Odds for a September rate hike increased as well, though that scenario also seems very unlikely. 
• Three support levels to watch going forward on SPX is 2168, 2155, and 2147. The breaks are only valid if the price can close below those support levels. 
• The dip buyers are still alive in the last hour of trading and even more so when the market is showing notable weakness going into the close. 
• CBOE Market Volatility Index (VIX) showing signs of finally emerging out of its base of the past month. Despite sell-off at the highs, the rally into the close managed to keep the VIX from only rising 0.15% on the day. 
  
• 30 minute price action of SPX maintains a nice double top pattern over the past two weeks of trading as well as a nice series of lower-highs and lower-lows over the past week. 
• Oil still struggling to find buyers over the past week, is at risk again to test the August lows again in the coming weeks. 
• Dow Jones Industrial Average (DJIA) has a double top that confirms on a move below 18247. 
• At this point, and with the election ahead, I’d expect the market to keep rallying higher. I don’t expect there to be a rate hike between now and the election. To do so would impact the market and thereby the election. I don’t think the Fed wants that, particularly since Trump has indicated that he would replace Yellen. 

My Trades:

• Covered IBM on Friday at $158.42 for a 1.6% profit. 
• Sold NFLX on Friday at $96.80 for a 0.3% profit. 
• Added two new short positions on Friday. 
• May add 1-2 new swing-trades to the portfolio today. 
• Will consider adding additional short positions to the portfolio as the market warrants it.
• Currently 10% Long / 30% Short / 60% Cash
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: