A Bounce Opportunity

03/16/2015 6:00 am EST


Ryan Mallory

Contributor, Share Planner

Ryan Mallory, of SharePlanner.com, offers his technical outlook for the S&P 500 based on last week’s price action, takes note of the heavy bounce that occurred last Thursday, discusses his assumption that the recent rally was just a dead cat bounce, and highlights the trades he executed.

Technical Outlook (SPX):

  • Heavy bounce last Thursday that sent price right back inside of the Bollinger Band.
  • SPX finished right at an old resistance level at 2065. It'll be interesting to see whether this price level becomes a problem again for SPX to break through.
  • Last Thursday's bounce took price back above the 5-day moving average as well as the 50-day moving average.
  • No significant technical improvement on the 30-minute chart, particularly when you consider that no higher high was formed. Will need to get above 2083 to   change that.
  • VIX dropped 8.5% down to 15.42.
  • Follow through is key for the market Friday. Without it, one has to assume the rally is a dead cat bounce until proven otherwise.
  • Volume was notably less than anything we saw in the past five days.
  • Oil remains extremely volatile and becoming more so each and every day. Very difficult to trade, as are the oil stocks.
  • The market doesn't care about the economy nor earnings. That is not what is driving it. The market only cares about what the Fed is doing to keep equities propped up.

My Trades:

  • Sold SPXU last Thursday at 36.67 for a 3.9% gain.
  • Covered CAG last Thursday at 33.78 for a 1.3% gain.
  • Covered NTAP last Thursday at 37.58 for a 0.8% gain.
  • Covered AAL last Thursday at 48.35 for a 1.4% loss.
  • 100% cash.

Chart for SPX:

Click to Enlarge

By Ryan Mallory, Founder, SharePlanner.com

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