Swing-Trading Outlook

Swing Trade Approach:

Good day for profit taking, taking half of my position off in UBER at $34.27 for a +13.7% profit, and Beyond Meat (BYND) at $94.57 for an 8% profit. In both cases, I'll let the rest of the position ride out. I added one additional long position, and still have a number of short setups waiting in the wings if need be. Yesterday's sell-off almost created a bearish engulfing candle pattern and gave up the early gains to finish notably in the red. In total there was a 22 point sell-off from highs to lows, and while I don't mind buying the dip, I don't want to simply trust this market strength coming into today, and would rather sit on my hands today and wait it out. 

Indicators

• Volatility Index (VIX) - A very small move out of the VIX, rising 0.2% to 12.56. Not going to be surprised this week, if I see a close below 12 at some point. 
• T2108 (% of stocks trading above their 40-day moving average): A 3.8% decline to 38% yesterday shows that the stocks under the surface still are not as strong as the overall market indices suggest they are. 
• Moving averages (SPX): Trading above all the major moving averages. 

 

Sectors to Watch Today

Only two sectors traded higher on Friday and they were both defensive ones: Utilities and Real Estate. Energy continues to see a lot of weakness, but the pullback so far is quite orderly, and nothing I would be concerned with at this point. Discretionary is also consolidating at the all-time highs, as is Financials. Healthcare and Technology are the two strongest sectors right now. 

My Market Sentiment

Following last Thursday's breakout, saw price pullback to the short-term breakout level. I'm curious to see if there will be more fading of market strength, or whether that was a one-time event, because typically when that starts the happen, you can find yourself on the verge of a bigger pullback.