Today's Trading Plan: Brexit Wins
Technical Outlook:
- Essentially the bulls counted their chickens before they hatched yesterday. Brexit voting did not go the way they expected despite rallying SPX 28 points yesterday.
- SPX looking at one of the bigger, historical gap downs that it has ever seen.
- Essentially today's gap down going to put us back near or below the lows from last week.
- To really get the sell-off going 1) break 2040 - it marks the bottom of 2-year range that is extremely difficult to break and the closing price of the double top pattern that has been forming over the last three months. 2) Break 2025, which is the intraday lows of that double top pattern, just to make sure you don't leave any doubt.
- The 5, 10, 20, and 50-day moving averages will be shattered at the market open. Possible if the selloff tests overnight lows, that SPX breaks below the 200-day moving average as well.
- SPY volume increased yesterday and was well above average. I'd expect it to be significant above average today.
- VIX chart should break back above 20 today and see an extreme move in the index today.
- Don't try and be a hero today - take what the market is willing to give you don't force trades for the sake of seeing some action.
My Trades:
- Closed my long position in VVC yesterday at $51.70 for a 0.9% profit.
- Closed my position in SPXU at $26.42 for a -2.1% loss.
- I went completely cash last night as I saw very little reason to play the brexit voting results.
- I'm not sure whether I'll add any new positions today. This will be violent and unpredictable price action today.
- Currently 100% Cash
Chart for SPX:
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It is amazing how much whining there is over indexes backtracking from assumptions that Brexit would not happen. The reaction is exactly proof of the dumb hand holding the market wants and demands after giving up on the free market and depending on central banks and government to change their diapers.
The market is a kitchen. There is fire. If you can't handle it go sit in the dining room and hope someone is still in the kitchen making the economy for you. Rather than cooks they are called capitalists, the one the Federal Reserve derides for not spending money and borrowing from banks to make them all powerful.
Love this analogy!