My Swing Trading Approach

I am coming into today 100% cash, I closed my one short position yesterday for a profit. I am not totally sure where this market goes from here. We could see a bounce, but there is also little support underneath until 2801 on SPX is reached. I plan to watch the market action early on and look for an identifiable trading edge to capitalize on. 

Indicators

  • Volatility Index (VIX) – Up another 12% but still in the downtrend off of the 2/9 highs. Currently sitting at 14.78, but needs to break and close above 15. 
  • T2108 (% of stocks trading above their 40-day moving average): No improvement here. Simply keeps getting worse – down 7.2% yesterday and now more stocks are trading below their 40-day moving average than above it. A huge red flag. Only 48% remains above the MA. 
  • Moving averages (SPX): Tested the 5-day and 10-day MA’s yesterday and were rejected. The 20-day moving average is now broken as well. 

    • Sectors to Watch Today

    Energy took a huge hit yesterday, and broke the 50-day moving average and appears to be in a free fall at this point. Don’t touch it. Healthcare has held up better than any sector of late. Staples continues its decline for a sixth straight day. Testing some key support, before things could get ugly on the downside. Technology reversal yesterday, raises fears of a potential rollover, but nothing confirmed at this point. Financials giving up much of the gains from the past month, while Industrials, looks like a sector that may be setting up for a bounce here.

    My Market Sentiment

    Four straight days in the red. The market tends to struggle to extend it much further without a bounce of some kind. In March there were six straight days of red, but the selling was much stronger. This sell-off that we have seen over the past four days hasn’t been on the strongest of volume readings. Should the selling pick up again, I would look for strength to present itself at 2801 price level. 

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