Today’s Trading Plan: Yuantervention Changing Market Landscape

Technical Outlook:

• For a second straight trading session, the markets will gap down due to the Chinese devaluing their currency. 
• Stocks like Apple (AAPL) who do a large amount of business in China will be most affected by this. 
• SPX also is looking at a gap down and below the 200-day moving average, which has been a very solid, rising support level for the market. 
• That makes today absolutely essential that the dip buyers come in and buy the dip and stabilize the markets. Otherwise, there could be a shift in market sentiment yet again. 
• You have to be very careful about shorting the market after two large gap downs. Ultimately, it sets the bears up for a squeeze. Despite the recent weakness in the indices, the market hasn’t ever rally setup to the down side, and up to today, didn’t create any real trading advantage to the short side when looking at the charts.
• VIX popped 12.1% but is struggling with its own 50-day moving average of late. 
• Inside day for T2108 (% of stocks trading above the 40-day moving average) by closing at 35.4%.
• SPX 30 min chart needs to break 2067 and establish a lower-low on the chart. SPX is expected to open up right near this level. 
• A view is emerging that a rate hike in September is off the table. 
• SPY volume was a slight bit above average. 
• First hour of trading will determine a lot of what this market intends to do today and whether the gap down will hold. 

My Trades:

• Added one new long position yesterday. 
• Closed out MSFT yesterday at $45.91 for a 3.3% loss.  
• 40% Long / 60% cash. 
• Remain long: FB at 94.71, UPRO at 67.39, EBAY at 28.81. 
• The key today will be whether dip-buyers can stabilize this market and push it back up after two days of devaluing the yuan. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: