Oversold Market In The Near-Term

My Swing Trading Approach

I am going to play it careful here with the weakness seen this morning. I won't rule out going short, but I will play it safe until a solid opportunity arises. Not looking to push anything here. Less is more here. 

Indicators

  • VIX - Coiling over the last five trading sessions in an elevated manner. Today's weakness, could see a push for 20 again. 
  • T2108 (% of stocks trading above their 40-day moving average): While trading higher on Friday, the T2108 is still showing notable weakness. Down to 48.5%
  • Moving averages (SPX): Still trading above the 50-day moving average, but will break below it this morning at the open. A potential retest of the 200-day MA is possible here. 

Sectors to Watch Today

Energy and Materials show the most strength on Friday, with the former being the strongest sector from last week. The latter, along with Industrials continues to trade in a sideways trading pattern going all the way back to  February. Healthcare continues to display a rising trend-line on the daily with higher-highs and higher-lows. Technology is the one to watch here, as it is testing a key support level over the last two days. Bull Flag in Utilities.  Financials, of all sectors, is the worst one to be trading in right now. 

My Market Sentiment

A nasty 19 point sell-off in the final hour of trading to close out the quarter, despite trading well in the green for the entire day, prior to. As a result a shooting star candle pattern has emerged, that can signal more downside to come for the market, and we are seeing that with additional pre-market weakness this morning, just like we saw last Monday, too. Holiday weeks tend to be low volume, bullish weeks historically. The market is definitely oversold in the near-term, and may be setting up for a bounce here. 

S&P 500 Technical Analysis

swing trading strategy report 234

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