The Market Is In Dangerous Territory

My Swing Trading Approach

With the large gap down this morning, the market is in dangerous territory, and risks breaking Monday’s lows and eventually the February intraday lows. As a result, I will stay put in my trading, until the market has provided me with a more definite trading edge to work with.

Indicators

VIX – A 10% sell off yesterday, didn’t do much to damage the chart. Remains range bound over the last seven trading sessions.

T2108 (% of stocks trading below their 40-day moving average): Series of higher-highs and higher-lows remains in place with yesterday’s 30% rally (current reading is at 35.6%). Right now, this is a solid bullish divergence but could easily come under fire today, with weakness in the pre-market.

Moving averages (SPX): Recaptured the 5-day and 200-day moving averages.

Industries to Watch Today

Energy, Industrials and Healthcare led the market bounce yesterday, while Utilities lagged. Energy showing the potential still for a base breakout, while Healthcare is exhibiting a double bottom similar to that of the S&P 500. Technology while having been hammered over the past month, is still one of the best long-term charts.

My Market Sentiment

The market is coming into the day in a precarious situation with the trade war escalating overnight with China. The 200-day moving average will be violated at the open, and a strong possibility that we see a significant sell-off that could take us, ultimately, back to the February lows to be retested. The double bottom, talked about below, is in jeopardy of being nullified today.

S&P 500 Technical Analysis