Today's Trading Plan: Market Starts To Weaken Significantly Again
Ryan Mallory | Feb 09, 2016 09:04AM ET
- Wild trading session that saw price drop over 50 points on SPX followed by a 30 point rally into the close that wiped out 60% of the day's losses.
- Despite propping up the market at day's end, the market still is trending lower based on what the charts are showing. A test of 1812 on SPX is very probable at this point.
- Volume was slightly higher than the previous trading session and above recent averages.
- The massive head and shoulders pattern and its neckline on the SPX/N:SPY weekly chart was tested yesterday and where the hard bounce took place at. This will be in play yet again today. If this confirms, the target on the pattern suggests an eventual 200-300 point move to the downside.
- VIX elevated itself yesterday rising 11% to 26. Panic should ensue on a sustained move over 30.
- Surprisingly, T2108 (% of stocks trading above their 40-day moving average) did not drop as much as I would have thought yesterday, only shedding 17%.
- Solid follow through yesterday on the bear flag confirmation.
- Potential double bottom play on the 30 minute chart of SPX. Bears will need to push this through the 1812 level quickly or risk the bulls rallying the market in the short-term.
- Oil is back to trading below $30/barrel this morning.
- Three separate but significant time frames have three major bearish trading patterns: Intraday (H&S), Daily (Bear Flag), Weekly (H&S).
- No real panic unfolding yet on the indices.
- Insane price movements every day being created by computer generated trading (HFT's) in a highly volatile market marked with enormous headline risk.
- There is a lot of stop-loss hunting out there in the market, and being agile with getting in and out of positions quickly has been extremely important.
- Sold N:SPXS yesterday at $22.07 for a 12% profit.
- Covered N:GS yesterday at $148.34 for a 4.4% profit.
- Added one new short position yesterday.
- Currently 20% Short, 80% Cash
- Remain short two positions.
- Market is starting to weaken significantly again, and looking to add 1-2 new short positions today.
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