Today’s Trading Plan: A Triangle To Break

Technical Outlook:

• Yesterday’s rally saw over half the gains fade before the end of the day. 
• S&P 500 futures have seen continual selling since the european markets opened. 
• Volume yesterday on SPY saw another uptick, that came in slightly above average. 
• VIX pulled back some with a 7.1% decline down to 24.37. 
• SPX continues to trade in a well-defined, short-term triangle pattern over the course of the 2-plus weeks. Which ever direction it breaks, will dictate the direction of future price direction. 
• The triangle appears bearish to me as more of a continuation triangle of the current price trend. 
• You could also make the case that the current short-term pattern is more indicative of a bearish flag on the daily SPX. 
• Double top pattern on SPX 30 minute chart remains valid and confirms below 1911. 
• Strong rejection at the 20-day moving average Wednesday. Very much worth keeping an eye on going forward. 
• 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. 
• 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. 
• 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:

• Sold SPXU yesterday at 39.04 for a 4.8% gain. 
• Added one new short position to the portfolio yesterday. 
• 10% Short / 90% Cash
• I’m looking for additional downside out of the market today with the possibility that SPX tests last weeks lows and in the process of doing so, I would add 1-2 more short positions to the portfolio. 
• Join me each day for all my real-time trades and alerts in the SharePlanner Splash Zone

Chart for SPX: