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Today's Trading Plan: Trying To Avoid SPX Weakness

Published 08/04/2015, 08:39 AM
Updated 07/09/2023, 06:31 AM

Technical Outlook:

  • Another day of weakness in the market which has been the main theme of this market for the past two weeks.
  • Despite 7 of the last 10 trading sessions finishing lower, the opportunity to profit from this market to the short side is very limited. The moves are very haphazard and lack a true catalyst.
  • Yesterday saw half the losses wiped away in the last hour of trading, suggesting that dip buyers are alive and well.
  • There is a convergence of moving averages grouping around the 2100 area that include the 5, 10, 20 and 50-day moving averages.
  • With a higher-low off of the 200-day moving average and possibly a lower-high formed on Friday, you essentially have the making of a range inside of a range.
  • The sooner the market can break out of this six month funk where direction has been completely absent, the better. Trading opportunities are very limited in this type of market.
  • Volume on the SPDR S&P 500 Fund (ARCA:SPY) increased for a second straight day and was slightly above average.
  • VIX rose 3.6% yesterday, but gave up most of its gains on the day as it came back down from the mid-13s and putting the bounce off of the high 11s in doubt.
  • SPX confirmed what sort of looks like a head and shoulders pattern yesterday on the 30-minute chart.
  • By failing to make new all-time highs, the market will create a lower-high and a higher-low, adding additional directionless inside of a range bound market.
  • For the bears, pushing below last Monday's lows is absolutely key here, which sits at 2063.
  • Inverse head and shoulders pattern on the daily chart that will confirm if price action can break through to new all-time highs.
  • Oil once again has become a problem for the market, as it broke the March lows on Friday and continued its move lower yesterday.
  • The NASDAQ Composite is by far the best chart among the indices right now. Others are very much range bound, but the NASDAQ has established a higher-high and higher-low. If Apple (NASDAQ:AAPL), which is a large % of the NASDAQ, can actually join this rally it could really take off.
  • My biggest ongoing concern with the market right now is the inability to establish new, clear-cut all-time highs that lead to an expansion of price as well. Instead, SPX gets bogged down in the 2120-2130s range and reverses course each time.

My Trades:

  • Added one new long position to the portfolio yesterday.
  • Closed out ProShares UltraPro S&P 500 (ARCA:UPRO) at 69.44 for a 1.7% gain.
  • 30% Long / 70% cash.
  • Remain long: ProShares Ultra QQQ (ARCA:QLD) at 77.84, Netflix Inc (NASDAQ:NFLX) at 107.63.
  • Will look to add 1-2 new positions today if the market can find its footing again. Otherwise, I will manage my current positions and consider some short opportunities.

Chart for SPX:

SPX Daily

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