Market Still Overbought

My Swing Trading Approach

I added a short position on Friday, it hasn't done anything for me to this point, and with futures pointing higher, I'll likely have to get out and get back on the long side. Right now it is pretty fluid, so the idea that the market could close the gap at the open also remains quite possible. 

Indicators

  • Volatility Index (VIX) - VIX opened higher on Friday, but once again fell victim to the 20-day moving average that simply will not let anything pass. It ended the day 4% lower and back down to 15.72. 
  • T2108 (% of stocks trading above their 40-day moving average): Fell for a third straight day and back below the '80s. However the damage isn't significant with 79% of stocks still trading above their 40-day moving average, but it is the biggest pullback since the rally started back on 12/26.  
  • Moving averages (SPX): Initially dropped below the 10-day moving average but reclaimed it into at the close. The 20-day moving average isn't too far below current price action now either. 

Sectors to Watch Today

Technology back to being the market's darling with a huge bounce on Friday. Utilities - get this - New All-Time Highs! Financials showed signs of recovery Friday afternoon, but overall they continue to lag overall market strength and should be avoided here. Energy has become less certain here. It did hold key support on Friday, but still much weaker than the rest of the market.

My Market Sentiment

Friday saw the BTFD'ers come back in full force following the morning sell-off. A bit surprising, considering still, how overbought this market is, and prime for a 1-2% pullback it is as well. However, price rules and has to be respected. Gap higher this morning, but be careful of the initial gap fill that may take place. 

S&P 500 Technical Analysis

(Click on image to enlarge)

swing trading strategy report 374

Current Stock Trading Portfolio Balance

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