Technical Outlook:

  • Friday marked the end of a very dull trading week for the S&P 500 (SPX) which only traded in a 25 point range and saw a weekly change of only 0.18 points.stock market trading sideways
  • SPX continues to find support at the 20-day moving average and refusing to close below it. 
  • SPDRs S&P 500 (SPY) volume actually increased and came in slightly below recent averages. Participation in the market over the last two months has been and continues to be weak from a daily volume stand point. 
  • Very choppy price action on SPX 30 minute chart. Has the potential pattern of a head and shoulders pattern. However SPY has a massive gap to fill going back to the 16th of this month. 
  • VIX continues to melt away each day after runs higher each time in the last three trading sessions. A break below 11 would be significant for equity bulls. 
  • Going forward, keep an eye on the 20-day moving average. Bulls have been adamant about preventing a close below it. Should it happen, it would reflect a change in the status quo for the market and a reason to reign in some of those long positions.  
  • T2108 (% of stocks trading above their 40-day moving average) since April has tapered off significant despite the market not losing any ground. The same phenomenon occurred last year from May through August. Ultimately the market broke and led to a steep sell-off. The market may be setting up for a similar move. 
  • On the other hand, it is hard for me to imagine that the big banks that appears dead set in favor of a Clinton presidency would create a selling frenzy just before the election. 
  • Personally, I think the market is begging for a sell-off but with the central markets accommodating continuously, that also gets in the way of any kind of meaningful pullback. Not to mention it is blatantly obvious that they are shelving any kind of rate hike until after the election. 
  • Oil continued its meteoric rise off of the August lows on Friday. But showing some early morning weakness today. 
  • Dow Jones Industrial Average (DJIA) is keeping the double top pattern in play here. However it is coiling just underneath resistance which leads me to believe it wants to break through.  
  • Overall, August is the worst performing month for the Dow and S&P 500. 
  • 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:

  • Did not close out any trades on Friday. 
  • Added one short position on Friday. 
  • Added one long position 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 50% Long / 20% Short / 30% Cash
  • Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX:

SP 500 Market Analysis 8-22-16