Today's Trading Plan: Digesting Terrorism

Technical Outlook:

SPX managed to bounce once again off of the 5-day moving average for a fifth straight day.

The theme in the market of late is not how much it is going up each day but how much it manages to recover off of the lows of the day.

SPY volume marked the lowest volume day of the year and lowest since the holiday volume on 12/30/15.

Again, watch the 5-day moving average today to see whether the buyers step in again to keep price steady. If the selling persists, watch the 10-day moving average as that MA has yet to fail despite multiple tests on the trend.

Terrorist attack in Brussels airport and metro will dominate the news today and possibly affect the market as well.

VIX continues to fall despite a strong gap higher yesterday. Has dropped five straight days and eight of the last nine days.

T2108 dropped 1.2% yesterday down to 86% – still highly elevated and overbought.

Breadth in yesterday’s slight rally was unimpressive. Most stocks spent yesterday starting to give back their gains.

Declining trend-line off of the November highs continues to hold with price closing right on top of resistance – but no break.

Small caps diverged yesterday and pushed lower. Could be signaling a pullback in the broader market.

The DIA ETF for the Dow Jones Industrial has been by far the most impressive, rallying 9 straight days and 14 out of the last 15 days.

The last time that SPX moved down more than 10% and then finished in the green for the quarter was 1933. Obviously, what has been seen so far in 2016 has never been seen by anyone currently trading.

SPX rallied for a 5th straight week, and in excess of 1% each time – not seen since the bottom of March 2009 was hit.

The biggest issue surrounding this market at this time is that reward with long setups is just on par with risk, if not worse.

My Trades:

Added one new swing trade to the portfolio yesterday.

Did not close out any swing-trades yesterday.

Currently 10 Short / 80% Cash

Careful to add long exposure considering that the market is as overbought as has been in years. A pullback, not necessarily a major one is in order here.