The Bearish Wedge

My Swing Trading Approach

I am concerned the bulls are running out of steam here, and while, I can still be motivated to add more long positions to my portfolio, I will need to see the action in the broader market show the willingness to break through some overhead resistance.

Indicators

Volatility Index (VIX) – Dropped 1% on Friday, but could very well be setting up again for a breakout to the upside.

T2108 (% of stocks trading above their 40-day moving average): Flat day for the indicator, but only 53% of stocks are trading above their 40-day moving average, while SPX and Dow are hitting new all-time highs.

Moving averages (SPX): Currently trading above all the major moving averages.

Sectors to Watch Today

Energy continues to be the hot sector, rising in each of the last six trading sessions. Now it is testing resistance, that if broken, will lead to an upside breakout and make a number of energy stocks an ideal trade. Utilities bouncing back after last week’s brutal sell-off. Industrials continue their impressive rally, but could start to tire out here. Materials looking to confirm a double bottom pattern in the short-term. Technology still a mixed bag and lagging the overall market.

My Market Sentiment

I remain bullish, but watching carefully the bearish wedge – the bulls will need to break through that level of resistance today if it plans to keep the momentum from last week going. Otherwise, we risk a pullback to the rising trend-line from the June lows.

S&P 500 Technical Analysis