Today's Trading Plan: Unfettered Bullishness
Ryan Mallory | Oct 29, 2015 08:30AM ET
Technical Outlook:
- Following the FOMC statement yesterday, in which they did not raise rates, SPX managed to rally over 1.1% to close at 2090 and at new rally highs.
- Market now setup for a possible test of all-time highs, when less then a month ago it was trading at 1871. Kind of insane really.
- Despite the FOMC meeting yesterday,N:SPY still failed to register above average volume. I can't remember the last time I ever saw that.
- Some pundits think that the Fed has opened the door to a rate hike in December. I'm not buying it.
- Bull flag on the 30 minute chart was confirmed with a breakout yesterday afternoon.
- This market is a perfect example of how an overbought market can stay overbought far longer than one might expect.
- VIX dropped another 7.1% down to 14.33. I expect at some point for VIX to test the 11-12 range before ultimately seeing any real selling pressures.
- T2108 (% of stocks trading above the 40-day moving average) is still trading in a consolidated range. closing 16% higher at 64%. A close above 70% would push it out of this range.
- Seasonally, this is the strongest time for the stock market, so a major rally like what we are seeing is no big surprise and not at all uncommon.
- Support for now appears to remain solid above the 200-day moving average.
- Ultimately, price on SPX is entering a range that has notoriously been difficult trading for most and one that vacillates consistently within a narrow range.
- 10-day moving average continues to be a strong barometer of market direction - a close below it would represent a short-term reversal.
My Trades:
- Added two new long positions yesterday.
- Did not close out any positions yesterday.
- 40% Long / 10% Short / 50% Cash
- Remain long: N:DIS at $105.88, N:MSI at $70.66
- Remain short: N:BBY at $34.49.
- Will look to add 1-2 new swing-trades to the portfolio today.
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