Yesterday was the perfect example that following the VIX would have kept you on the right side of the market.
The VIX gapped down at the open and stopped at 13.29, just one cent above the previously identified support level of 13.28.
From there it bounce up to a high of 14.00, just six cents shy of the 14.06 resistance level.
At that point, the VIX was trading between two resistance levels, while the S & P had traded slightly to the downside. At that point, you would be looking for either a breakdown through 13.28 or a breakout above 14.06.
It wasn't until around 1:30 EST when the VIX took out 14.06 ... and continued to run.
That should tell you that the markets should continue to drop.? At that time the S & P 500 was around 2,072 and proceeded to sell off to 2,064.46.? A quick drop of around 8 points based on the breakout of the VIX.
This action tells us a few things.? First is that a close above 2,078.12 yesterday would have confirmed the move up to 2,125.? Because that did not happen the S & P 500 will need two consecutive closes above that level to move higher.
The second thing we can infer was that when the S & P broke under 2,078.12, the logical move would be to a retest of 2,062.50.? 2,062.50 should be strong support for the S & P 500.
And pre open, it appears that the S & P 500 is set to open about 12 points higher.
One other thing I want to point out about yesterday's price action was that is was still an inside day on the daily chart.
Though it seemed like a large sell off, it still formed a lower high and a higher low.
This type of price will often lead to a range expansion.
Here are the key levels for the markets.
VIX:
Major level - 25.00
Minor level - 23.44
Minor level - 20.31
Major level - 18.75
Minor level - 17.19 *
Minor level - 15.63 *
Minor level - 14.06 *
Major level - 12.50
The objective for the VIX should now be to a retest of 12.50.
Look for 14.84 to be minor resistance and now 14.06 should offer support.
Minor support is still at 13.28.
S & P 500 Cash Index:?
Major level - 2,125.00
Minor level - 2,109.38
Minor level - 2,078.12 *
Major level - 2,062.50 *
Minor level - 2,046.88
Minor level - 2,015.62
Major level - 2,000.00
The S & P 500 still needs two closes above 2,078.12 for the objective to be 2,125.
Watch how the S & P reacts around the 2,078 level today.? 2,074.20 should also be a level to watch today.
Also, if the S & P can clear 2,070.30, I would expect it to act as support.
The 2,062.50 level should be strong support.
Nasd 100 (QQQ):?
Major level - 112.50
Minor level - 111.71
Minor level - 110.16
Major level - 109.38
Minor level - 108.60
Minor level - 107.03 *
Major level - 106.25
Minor level - 105.46 *
Minor level - 103.91
Major level - 103.13
Like the S & P, the QQQ formed an inside day yesterday as well.
106.25 acted as support and should still be support.? To move higher, the QQQ will need two closes above 107.03.
If the QQQ can get above it,? look for support at 106.64.? 107.81 should be minor resistance.
TLT:?
Minor level - 132.03
Major level - 131.25 *
Minor level - 130.46
Minor level - 128.91 *
Major level - 128.13
Minor level - 127.35
Minor level - 125.78
Major level - 125.00
The TLT finally closed above the 131.25 level, closing at 131.61 yesterday.
130.47 should be support.? To move higher, the TLT will need two closes above
132.03.
GLD:
Major level - 125.00
Minor level - 124.22
Minor level - 122.66
Major level - 121.88
Minor level - 121.10
Minor level - 119.53
Major level - 118.75
Minor level - 117.96
The GLD closed yesterday at 122.12, just above the 121.88 level.
To move higher, the GLD will need two closes above 122.66.
Major support should be at 115.63.
XLE:
Minor level - 69.53
Major level - 68.75
Minor level - 67.96
Minor level - 66.41
Major level - 65.63 *
Minor level - 64.84 *
Minor level - 63.28
Major level - 62.50
The XLE closed above the 65.63 level.? If the XLE can hold support at this level, I would expect a move up to the 72 area.
64.84 should be minor support. Two closes above 66.41 and the objective should be to 68.75.
Apple:
Major levels for Apple are 106.25, 100, 93.75, and 87.50.
93.75 is still holding as resistance.? If Apple can rally to around the $100 level, it would be a great short.
It has moved into downtrends on it's shorter term charts.
Watch list:
Bullish Stocks: AMZN, LMT, BCR, STZ, LLL, BDX, RTN, VMC, JNJ, THS
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Bearish Stocks: TSLA, ANTM, SIG, ASML, GILD, RL, AGU, TGT
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Be sure to check earnings release dates.
