Today's Trading Plan: On A New Frontier
Technical Outlook:
- A day of rest for the market yesterday - Dow (DIA) and SPX finished flat, while small caps and tech pulled back a shade.
- Futures looking at a significant gap up this morning following a well received JPM earnings report.
- Considering price action yesterday, it wasn't surprising that SPY volume dropped off some and was below recent averages.
- Nice bull flag pattern on SPX 30 minute chart.
- Difficult place for the bears at this juncture. You can try to short the market and call a top, but there is no basis. There is no more range and the topping patterns from the past two years have been negated.
- If the bears were to change the tune of this market, they could start by breaking key support (previously range bounce resistance) at 2120.
- SPX is in line to challenge 2200 in the coming days.
- VIX index actually sank 3.8% yesterday snapping a two days winning streak. Breaking and closing below 13 will be a key move for VIX and the market as a whole.
- At this point, and with the election ahead, I'd expect the market to keep rallying higher. At this point I don't expect there to be a rate hike between now and the election. To do so would impact the market and thereby the election. I don't think the Fed wants that.
- There is a great deal of bullishness to this market right now despite the prevalent amount of worry. It has been over two years since the market has actually seen a legitimate rally and so it wouldn't be surprising to see this market continue its current trend higher as shorts are forced to face the new reality of the market.
- In the very near term, the market is getting stretched, so some profit taking could be in store, though I don't expect it to be enough to drag prices significantly lower.
- At this point, it can be said that the market is climbing the "Wall-of-Worry".
- Market is assuming that rate hikes are pretty much off the table for all of 2016.
My Trades:
- Did not add any new swing-trades to the portfolio yesterday.
- Did not close out any swing-trades yesterday.
- Will look to add 1-2 new long positions today.
- Currently 40% Long / 60% Cash
Chart for SPX:
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