Today’s Trading Plan: The Fourth Is Weak With This One

Technical Outlook:

• Another sell-off in SPX yesterday that once again saw the bulls buy the dip at the days lows and drive the price higher, thereby eliminating a good chunk of the day’s losses. 
• It is hard to say that the bears have full control of this market when the bulls manage to rally the masses each afternoon and into the close. Once that ceases, then the bears will have some level of control. 
• The objective for today is two fold for the bears: 1) break last week’s lows at 2052 and 2) Close below support at 2041. 
• SPY volume was notably higher yesterday, and twice what we saw during Monday’s rally. Volume was also above average. 
• VIX continues to struggle to breakout at 16.30-40’s. 
• The market is staring at another gap down for a second consecutive day. Once again it will be imperative for the bears to hold down the fort and not allow that gap to fill. 
• A major sell-off today could take price to the 50-day moving average. Watch for whether price kicks in at support here. 
• T2108 (% of stocks trading above their 40-day moving average) saw its lowest closing since 2/29/16 by dropping 13%. Indicator also broke out of its tight two month range was well. 
• SPX 30 minute chart continues to deteriorate from the nice trend-line that was previously in place off of the 2/11/16 lows. 
• Last week marked the first time in eleven weeks where SPX finished below the previous week’s trading lows. 
• Yesterday officially kicks off the “Sell in May, Go Away” theory. Last year the market peaked in May before trending lower the rest of the year.
• Historically the May through October time frame is much weaker than the rest of the year.
• It is very important to be aware of the potential for a strong pullback here and to manage your long position risk accordingly. 
• 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:

• Covered IWM yesterday at $111.68 for a 2.1% profit
• Added two new positions to the portfolio yesterday.  
• Currently 30% Short / 70% Cash
• Remain Long: SDS at $18.69 (ETF Short)
• Will look to add 1-2 new short positions today if the market seeks to push lower. Will be aware for the potential of a bounce as well. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: