Swing Trading Strategy:

Down, Up, Down. Up?

Bernie Sanders is faltering big-time tonight, and to be honest, I thought Klobochar and Butt-Edge-Edge dropping out was too little too late, but apparently it was enough to give a boost to Biden and what looked just a couple of weeks ago to be a campaign on the brink of disaster. This is probably good news for the market because it probably freaked Wall Street out at the prospect of a Bernie presidency. Biden won’t stress the market out one bit, so tonight’s primary might actually provide some calm to the market as a whole.  If we finish up tomorrow, it should be assumed we are in a massive chop, similar to that of the summer of 2015. If that is the case, a choppy session would likely lead to a retest of recent lows but ultimately lead to a bounce higher. That doesn’t mean today is the last day we’ll see another decline. Far from it, it just means that choppiness is better than a straight sell-off like the one seen last week.  

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) – Quite impressive the reversal in the VIX had today, managing to go deep into the red to finish up 10% at 36.82. VIX is not giving up much ground despite being incredibly elevated. 
• T2108 (% of stocks trading above their 40-day moving average): Back in single digits with an 18% move back to 9% overall. 
• Moving averages (SPX): Broke back below the 5-day and 200-day MA’s. The latter of which is losing its effectiveness as support/resistance level. 
• RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

Like yesterday, Utilities and Real Estate showed the least amount of weakness along with Materials. With the 50 basis point rate cut by the Fed today, Financials fell completely apart, followed by Technology. 

My Market Sentiment