The Bulls Will Test The 200-Day Moving Average?

My Swing Trading Approach

I expect to remain light on my feet today, as the bulls are struggling, and I do not want to add more long exposure in this kind of market. I will be raising the stops on existing positions this morning to help secure profits.

Indicators

VIX – A tight coil in the VIX in recent days. Can’t seem to breakout or breakdown and out of it. A 3% bounce yesterday keeps it right around the 16 area.

T2108 (% of stocks trading below their 40-day moving average): Yesterday’s sell-off didn’t do much to this indicator as 48% still trade above their 40-day moving average.

Moving averages (SPX): 5, 10 and 20-day moving averages have converged. I expect there will be a bounce of the 200-day moving average.

Industries to Watch Today

Energy and Materials were the only profitable sectors yesterday, while everything else struggled. Technology held up well due to Apple (AAPL) earnings. Staples continues to be the worst of all the sectors to be in. Yesterday it broke through major support and is in a free fall mode right now.

My Market Sentiment

It seems to me like the bulls will test the 200-day moving average. The problem with this is that the bounces off of the 200-day moving average keeps getting less and less, which shows that momentum is waning. Expect a battle at this area, that likely happens right away at the market open today.

S&P 500 Technical Analysis