My trading strategy in coming two months is to short any overbought market with extreme complacency

The S&P 500 Index wrapped up the day on a huge gain of about 31 points, closed at 1080.29. It was an unusually bloody August for the stock market, but traders seemed determined to make up for lost ground on the first day of September. Stocks bolted higher right out of the gate this morning. A drastically improved tone among participants caused stocks to climb quickly and sharply early on, but the S&P 500 spent the rest of the session trending alongside its 50-day moving average.

U.S. manufacturing growth unexpectedly accelerated in August, an industry report said Wednesday. On the other side, U.S. construction spending hit a decade low in July, private employers cut jobs in August and U.S. car sales moderated, according to separate reports.

July construction spending fell 1% to the lowest since July 2000, led by a sharp decline in homebuilding. High unemployment, a large amount of unsold homes and the end of post-tax credit are affecting demand for new homes. I believe construction will be a drag on the economy for the next quarter or two.

Many investors are likely to await Friday's jobs report before they begin to believe in the economic recovery again. In my opinion, we obviously have a long way to go before this job market looks and feels like a recovery.

Once again, technical analysis proved to be the most reliable tool for day traders and swing traders.Today's rally is the result of the oversold market technical bounce, not the good news and reports.

It's true that we have a very good ISM report, however we also have a bad construction spending report. In addition, employers cut 10,000 jobs in August. Traders just ignore the negative news and focus on the good side. Market participants just grab any opportunity and excuse to buy. If you did read my post yesterday("Market is searching a short term bottom, it will rise for any positive news"), you won't be astonished with today's SPX 31 points gain.

Traders have to be very cautious with any rally happen from now on especially both the daily and weekly 50 moving averages are below 200 moving averages and we are going through the three bearish months in a year, August, September and October. August end up bloody, we will watch how stocks hold up in next two months.

My trading strategy in coming two months is to short any overbought market with extreme complacency. I will watch the 5, 15 and 60 minutes RSI charts. If they are all at 80% range and critical resistance, then I will place my short order.

Today's market look very attempting to me, so I bought some SPXU when the market is at the high of the day, I may cover it at 1070-1065 tomorrow if the market is on my side.