Swing Trading Strategy:

Bears getting bullish...

Lots of rumors of long-term bears suddenly turning bullish on this market now and wanting to buy stock. They are feeling bold, a little cocky, and want to stroke their ego by getting bullish ahead of everyone else. Like that annoying friend who double dips his chip in the salsa bowl.  

I'm actually open to it more now as well, and found it interesting, some of the late day buying that formed some typical bottom-forming candles on the daily chart with stocks like Square (SQ), Starbucks (SBUX), Walt Disney (DIS), relative strength in the FAANG stocks as well as a ton of others. 

But right now futs have given up overnight gains and bleeding once again and might even limit down once again tonight. So like we have seen so many times before, end of day rallies have meant very little to these markets. 

You can check out all of my trades that I have made in 2020 - where I have been solid in the green both months by clicking here. 

Indicators

• Volatility Index (VIX) - It's not likely you'll see to many more instances where SPX drops 5% and the VIX doesn't even push 1% higher. Nonetheless, it still closed at a ridiculous 76.45. Those aren't normal numbers and it is holding up with splendid conviction. 
• T2108 (% of stocks trading above their 40-day moving average): A 22% drop that took the indicator back under 3%. Still an astronomically low reading and yet to get a legitimate, multi-day bounce out of it. 
• Moving averages (SPX): Currently trading below all the major moving averages. 
• RELATED: Patterns to Profits: Training Course

Swing Trading Strategy:

Be careful of what you put your faith in...

Before you do anything else - watch my video on the stock market and its outlook that I posted this weekend!

It was a nice rebound for the market. S&P 500 rallied 143 points. Huge. I mean, even a 10 point rally would have been huge for this market. I'd even venture to say a 10 point sell-off would even be bullish at this juncture. 

But does it change anything? 

No. We're still below all the major moving averages, and while we reclaimed some major support, the volume was lighter for a fourth straight day, and it makes me think there wasn't a ton of interest in this rally. In fact its highs of the day were reached at 12pm ET, and never reclaimed them. If this market was serious, it would have soared past the morning highs and closed at new ones.

But it didn't. 

That doesn't mean the market can continue it's rally and improve sentiment going forward, but it has failed to do exactly that since February 11th, which was the last time the market rallied two straight days. 

Don't get me wrong, the market has so many discounted and incredibly priced stocks right now, but what good are they, if the market continues its sell-off. We are still below all the major moving averages, and there has been no repair on a technical front and remain on a downtrend with the daily and intraday charts. 

Sorry for being a 'Negative-Nancy" here but I'm being as serious as I can be with you here. I don't care about the feel goods or providing hope in the stock market. Sure, I want to see things improve, as I hate to see the world self-destruct on the daily due to the Coronavirus, but we are, and it isn't worth the risk of capital until we can see some bottoming in this market. 

I'm still 100% cash, and while my heart aches for those losing so much, I am sleeping like a baby in regards to my own welfare in the market - and that is because I manage the risk and make it my top priority. 

You can check out all of my trades that I have made in 2020 - where I have been solid in the green both months by clicking here. 

Indicators

• Volatility Index (VIX) - Following a 43% increase yesterday, it pulled back 8% today to 75.91. It's safe to say that the VIX remains historically elevated at these levels, and should not be taken lightly. For the most part, such a small decline relative to the huge increase over the past month, I would say the VIX really didn't budge much. 
• T2108 (% of stocks trading above their 40-day moving average): LOL - A 112% increase today, taking it back up to 3.5%. The highest closing reading of the past 5-days. In the grand scheme of things once you get into the 3's, whether it is that or anything less, is really trivial. It is grossly oversold. 
• Moving averages (SPX): Currently trading below all the major moving averages. 
• RELATED: Patterns to Profits: Training Course

Swing Trading Strategy:

How low it goes, nobody knows...

Before you do anything else - watch my video on the stock market and its outlook that I posted this weekend!

Today's price action was earth-shattering on every level. I mean, could you imagine back in November saying "The Dow is going to rally 3000 points this month!". Anyone would think you were absolutely crazy to say such a thing. But look at what we did today - we sold off by 3000 points, not in a month, but a single day!

• The S&P 500 sold off 324 points!
• The Nasdaq almost a 1000!. 

A market sell-off that was a pure market crash...again!

That's some crazy stuff. I didn't add a single position to the portfolio at any point today. I came into today 100% cash and I left 100% cash. And in the process I avoided a market crash entirely. When you can avoid something like that - it puts you so far ahead of the game, it is crazy. I'm not digging myself out of a 12% sell-off. I've avoided a 30% sell-off from all-time highs since late February because I chose to simply manage the risk on my trades. 

I knew I couldn't swing-trade this stock market in any capacity on Monday, so you know what I did? I stayed out of the market. 

Like the old G.I. Joe cartoon from the 80's "knowing is half the battle". If I tried to swing-trade this market, no matter what, I probably stood an 80% chance at failing and the loss probably would be big. 

So I abstained - and that is so important. It doesn't mean you are any less of a trader but it means you are a better one for it. 

Where does the market go from here? it could go a whole lot lower, with plenty of dead cat bounces in between and if it does - just let it be. If a good trade setup arises with an ideal risk/reward and a decent level of predictability in terms of outcome, then go for it. but a low probability trade and high risk outcome is what you want to avoid. 

If the bulls rally 300 points tomorrow, I am okay with that. I'm avoiding so much loss, and that counts for so much!

You can check out all of my trades that I have made in 2020 - where I have been solid in the green both months by clicking here. 

Indicators

• Volatility Index (VIX) - Are we going to hit 100? Just maybe I mean look at what it did today - it rallied like gangbusters by 43% higher to close at 82.69. Consider that 2008 never got higher than 89. The fear in this market is astronomical at this point. 
• T2108 (% of stocks trading above their 40-day moving average): It didn't break Thursday's lows, but at this point considering how rock bottom it is, it really doesn't matter. It closed 45% lower at 1.64%.
• Moving averages (SPX): Currently trading below all the major moving averages. 
• RELATED: Patterns to Profits: Training Course