This is how I would approach my day trades and swing trades.
I am taking next week off.
1. We want strong economic numbers in August. The only numbers out next week are CPI/PPI. The market has shrugged off “hot” numbers in the past so I am not expecting a negative reaction if they are higher than expected. There is a possible surprise to the downside with energy prices falling and that would spark buying.
2. More jobs are good. So far the economy has been able to shoulder the rate hikes so far. Know that the rate hikes to this point will still take a couple of months to cycle through. Hourly wages were a little hot (.5%), but we have seen higher.
3. The market is still in a longer term down trend. When the volume declines during a bounce and we see price compression, a drop is coming.
4. We have a bullish div on a D1 basis and I like the duration of the current bounce. It tells me that support is forming. I believe the low of the year is going to hold.
5. The action is going to die down next week. Use any market drop to sell out of the money bullish put spreads on stocks that have relative strength and nice breakouts on volume post earnings. Sell them below technical support and stay inside 3 weeks. I like to generate a 25% return on these (credit/margin req). This will take advantage of dull market conditions, time decay and a decent market bid.
6. Day trading will be difficult. Trim your size and trade count. Focus on a handful of stocks. When possible lean on sector rotation.