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TODAY'S UPGRADES & DOWNGRADES

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TUESDAY'S BREAKOUTS & BREAKDOWNS

The neutral range we are in right now is limiting the daily number of breakouts and breakdowns. There are only just a few each day that meet my criteria (esp. price and volume). Currently, the healthcare sector and biotech and pharmaceutical industries are doing the best in terms of displaying the most bullish patterns and they should be considered the core of a long portfolio. The retailers appear to be doing the absolute worst. It’s no surprise that they are breaking down every, single day and they should be avoided at all costs. Most sectors are just zigzagging up and down which is the reason why the general market is in a neutral range. As a group, we are simply not making any price progress or seriously taking back lost ground. The first six charts are not breakouts, but they are breakouts possibly waiting to happen. As always, breakdowns are for future preventative purposes.

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TODAY'S ACTION

Today was an easier day and more predictable than yesterday, obviously. It's important to keep your cool and to calm down if you find yourself too excited when you're making or losing money. I always tell my students to have patience in the face of considerable pressure. This morning I sent an alert at 9:28AM writing that I was anticipating a bounce (which did happened). At 9:56AM, I issued a "100% Short" order - slightly early, but didn't matter, the rally was dead from the start. A 10:30 alert was issued to notify traders that it will be another volatile session and if they can't handle it, then get out. A 2:37AM alert was sent notifying that I was still 100% short. A final order at 3:40PM was given to unload most short positions and have some cash handy for tomorrow. I netted a cool 5%.

We tested the lows for the $RUT, slightly for the $COMP, and not quite for the $SPX and $DJIA. The $VIX remains elevated, but the fear seems to be subsiding as it has not tested it's own highs (as of today). The indicator is still consolidating and a breakout is still possible as long as it hold the 20-day MA. As long as we have uncertainty surrounding the markets, it cannot start a strong rally (Ex: GM). In addition, looking at the market's components, 14 out of 28 sectors ended lower with the most decline coming from the broker-dealers, banks, semis, telecom, transports, and gold. I stated previously over the weekend that we needed to 1) cancel out Friday's loss on Monday and 2) break through the 20-day MA within 3 days. Both conditions have not been met yet.

We want to look out for 865 overhead resistance on the $SPX. There is support at around 845-850. We are not out of the woods yet regarding testing Thursday's low.

SPX 1-day

SPX 3-day

SPX 10-day

SPX 6-month

VIX 10-day

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