Today’s Trading: Waiting to Unleash the Fury

Technical Outlook:

• Following a weaker than expected employment report, S&P 500 (SPX) managed to put together a small rally that lifted price back above the 5, 10 and 20-day moving averages. All three of which are just four points apart in total. 
• Following the highs being established early in the trading sessions, the market proceeded to give back most of those gains until the afternoon dip buyers/rampers rallied the market into the close. Overall, the rally was meager at best. 
• After the rally on Friday, this leaves the SPX in back in the undesirable area of consolidation that it spent all of August and most of July, stuck in. 
• Of all the indices, the Russell 2000 (RUT), is by far, the most bullish, as it sits at the cusp of establishing new rally highs.
• SPDRs S&P 500 (SPY) volume fell off some from the day prior but was just a shade below recent averages. 
• SPX on the 30 minute chart still shows a significant double top pattern that is in place and yet to be threatened to any large degree. 
• On the daily chart, there is the possibility of a head and shoulders pattern being formed, and Friday’s action being the start of the right shoulder. 
• Massive meltdown on Friday on CBOE Volatility Index (VIX) where the index saw a 11.1% drop down to 11.98. It was an unusual sell-off considering the bandwidth of the VIX of late. 
• SPX is consolidating in a very tight pattern, while stocks under the surface continue to erode in value. This same behavior was seen back in August of 2015 (but in a wider range) and ultimately led to a sudden and very sharp sell-off. 
• As a trader, this is not the kind of market environment that you want where price simply reverts to the mean. You want trendlines and chart patterns. A flat, non-moving market is not ideal for trading opportunities. 
• Crude Oil Futures (/CL) shows a massive head and shoulders pattern forming, going all the way back to March of this year. Break the August lows and it confirms. 
• The market is showing a decoupling from oil as the rise and fall of the commodity in June, July and now August has not impacted the equities market substantially. 
• Three support levels to watch going forward on SPX is 2168, 2155, and 2147. The breaks are only valid if the price can close below those support levels. 
• Dow Jones Industrial Average (DJIA) has a double top that confirms on a move below 18247.

My Trades:

• Sold ADBE on Friday at $103.44 for a 2.2% profit. 
• Covered TSCO on Friday at $84.99 for a 1.4% loss. 
• Added one new swing-trade to the portfolio 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 10% Long / 40% Short / 50% Cash
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: