First, lets look at the SPY . Yesterday, SPY gapped up and broke above the downsloping and closed at HOD - a good sign for a followthrough day. Today we got a somewhat flaky followthrough day as we closed at the middle on the range following a large selloff at the end of the day. The intermediate term trend is currently neutral. For a case, I would like to see SPY test the 235-238 area where the 5DMA and Anchored from the lows align. Otherwise we could easily a retest of lows.
I won't go too in depth with QQQ and DIA today as they all look very similar to the action on SPY ; however it is important to note today's changes in each index. QQQ closed red at -0.74%, DIA closed green at +2.54%. Notice the in DIA and relative weakness in QQQ . During Bear markets, it is common to see rotation out of previous leading sectors such as Technology ( QQQ ) and into utilities and industrials ( DIA ). A quick google search about Sector Rotation can better explain this phenomena. This type of price action are clear indicators we are in a bear market and until we see rotation back into leading sectors such as technology, this bear market will continue to persist.
The price action on VIX is quite telling for what the future could hold. Although we had a nice reaction bounce yesterday and today, VIX recovered it's initial gap down and closed green today. VIX looks like it is consolidating and could breakout tomorrow. I expect VIX to retest highs.
Overall, the intermediate trend and the short term trend are both neutral and is still high. These are not favorable conditions for the swing trader. Until we see trending conditions, now is not the time to put on new trades. Instead, as a swing trader you should use this time to start looking for new long or short ideas. When markets start to trend, you will be ready to take advantage of the new leg up or down.