Stocks: A Triangle Pattern Is Forming

My Swing Trading Approach

I will look to add another couple of positions to the portfolio today, but hold off adding any additional positions, until the downtrend is broken.

Indicators

VIX? – VIX dropped off of their highs of the day, in a big way. Despite only being down 4% yesterday, the overall move lower off of its highs of the day, was much larger. VIX, like SPX is coiling.

T2108 (% of stocks trading below their 40-day moving average): A significant move yesterday, pushed the T2108 higher by 22%. The current reading is 33%.

Moving averages (SPX): Broke back above the 5, 10 and 20-day moving averages yesterday. Solid move for the index, despite low volume. The 50-day moving average will be in view today.

Industries to Watch Today

Utilities was the market’s big winner yesterday. Potential bottoming process underway in a very downtrodden sector. Consumer Cyclical lagged the most, while the other sectors traded in line with each other. Energy is putting together a double bottom, while Technology is poised for a test of its all-time highs again.

My Market Sentiment

A triangle pattern is forming, and while yesterday’s follow-through was important, the price needs to hold the trend-line underneath while breaking above the downward trend-line established off of the January highs, in order to become decisively more bullish on this market.

S&P 500 Technical Analysis