Today’s Trading Plan: What Will The End of Summer Bring

Technical Outlook:

• Another huge gap for the market of nearly 2% at the market open today – this time to the upside. 
• This marks the fifth straight day of a massive gap up/down for SPY. 
• It is the gaps that are really standing in the way of swing-traders right now. When you have an equal number of monster gap up/down from a day-to-day basis, the penalty for being on the wrong side of the trade is greatly intensified and creates a high-risk environment that is not conducive for overnight holds. 
• The large gaps in the market, the record number of stock buybacks, and ETFs that are constantly accumulating/dumping large chunks of stocks, and most importantly the high frequency trading, shows just how illiquid this market has become in recent years. These entities are the most responsible for the massive market swings that stocks incur each day. 
• VIX of late, during large market downswings, hasn’t seen the kind of response to the upside that you’d expect from the VIX. This time around it was up 8.6% to close at 27.80. 
• Potential for a double bottom to form on the SPX 30 minute chart. 
• The big task for the bulls in the coming days will be to close SPX above 1993. That would create a higher-high for the current price action and would likely start to attract more buyers to the market again. 
• SPY Volume saw an uptick on Friday. 
• This market is one that seeks to fill traders with regret, whether it be for selling too early, selling to late, not being long enough, not being short enough. That kind of regret will manipulate you into trading in a manner that will bring ruin upon the capital in your portfolio. 
• You cannot, with any confidence, consistently pick the direction of this market day-to-day. 
• Trade nimble, be careful about holding positions overnight, because the volatility is still at extreme levels and much of the daily moves are happening before the market ever opens. 

My Trades:

• Did not close out any positions on Friday. 
• Did not add any new positions on Friday. 
• 100% Cash
• Most of the daily moves on these large gap up days are made in the pre-market. I’ll be looking for trade setups that allow me to fade this market move today. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: