A Bounce Today?

My Swing Trading Approach

No new positions for me added on Friday. Didn’t like the price action and chose to stay on the sidelines instead. This morning, I will be most interested in whether the bulls can hold the gap up, and I will be looking to add 1-2 new trades to the portfolio this morning.

Indicators

Volatility Index (VIX) – Still unable to close at the highs of the day, however there is a fairly well defined inverse head and shoulders pattern that has developed and could see a break higher as a result.

T2108 (% of stocks trading above their 40-day moving average): Not liking the overall look, especially if it loses the $45 level which would mark a lower-low being established. Currently sitting at 48% following Friday’s 6.3% sell-off.

Moving averages (SPX): Tested and held the 20-day moving average on Friday.

Sectors to Watch Today

No major winners on Friday, but Telecom did manage to bounce off of its 50-day moving average. Technology displayed relative strength by pulling back to the June lows and bouncing perfectly off of them. Looking for a good bounce out of them here. Healthcare in a bull flag pattern. Energy near the bottom of their recent channel – may see a breakdown here, following six straight days of selling. Utilities sporting a quasi bearish kicker pattern today and could also be forming a double top in the short-term.

My Market Sentiment

The 20-day moving average and short-term support managed to hold strong for the bulls yesterday. Look for a bounce today.

S&P 500 Technical Analysis