Today’s Trading Plan: On the Brink of Concern

Technical Outlook:

• After an initial hard sell-off, SPX managed to rally off of the lows of the day and curb the overall damage to the market. 
• SPX closed slightly below the 200-day moving average. 
• The rising trend-line off of the October lows was touched again yesterday and held perfectly. 
• SPY volume over the last two days has been weaker than the readings I have seen of late and below normal averages. 
• The market continues to trade sideways over the past month and a half and stuck within a four percent trading range. 
• VIX rose 11% yesterday to close at 17.60 and right under the descending trendline off of the September highs. 
• T2108 (% of stocks trading above their 40-day moving average) continues its free fall, shedding another 16 points to close at 30%. This is the lowest reading on the indicator since 10/2/15. 
• With today’s early morning weakness, the traditionally strong seasonal factors associated with December is being put to question. However, in recent years, SPX has seen some selling across the board early on, before ultimately rallying higher before the end of month. 
• Rising trend-line as seen in the chart below, off of the October dip on 10/14, represents a key support level that must hold if the selling continues to accelerate to the downside. Current support is at 2041. 
• 50-day moving average at 2048 is in play today, which provided some support of late. 
• 30 minute chart of SPX is providing little to any price pattern that could be considered. 
• Inverse head and shoulders pattern is still in play here, as confirmation is at 2115. Secure that price level, and this market takes on a whole new meaning for the bulls. 
• If the 11/16 lows are lost at 2019, you have a confirmed double top pattern that is now in play on SPX and the market turns decidedly bearish as a result. 
• For twelve years straight, the market over the course of the last 30 trading days of the calendar year, has yielded a net positive gain, and thus reinforcing the concept of the “Santa Rally”.

My Trades:

• Added one new long position to the portfolio yesterday. 
• Closed out BAC yesterday at $17.23 for a 3.2% loss. 
• I will consider adding 1-2 new positions today if the market can avoid another sell-off.
• 60% Long / 40% Cash
• Remain long: AMZN at $673.85, ADSK at $63.63, CRM at $79.86, and three other positions. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: