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Last week, the S & P 500 finally had the sell off we have all been waiting for. The market closed down 110.75 points to the downside, to close at 2,762.13.
Considering the weekly average true range is 43.62, the range for the week was 261% of the average true range.
And with a 2% close percentage, we expect the low for last week to be violated before the high. And that certainly seems true based on the pre market trading.
Could we have predicted this turn?
Based on the VIX & the S & P 500 both closing to the upside on a weekly basis, this us usually indicative of a market turn. This happened on January 12th and 19th. Then the market market exploded higher on the 26th.
And last week we got the sell off.
The sell off also brought the market back inside the upper band on the weekly chart and the daily chart. Actually, on the daily chart, the S & P 50 had closed under the upper band on January 30th.
This is why I am always reluctant to consider initiating long positions above the upper band.
As for the daily chart, Friday had a massive 59.85 sell off. This would put resistance based on Friday long range bar in the 2,785 area.
The VIX had a massive 28.51% jump on Friday and puts the VIX above its upper band on its daily chart. The upper band is 14.84 and the VIX closed Friday at 17.31, so you can see it is about 3 points above the upper band.
The only bullish scenario from Friday was the fact that the down to up volume was 13.61. This is well above the climax level which tells us that a bottom should be forthcoming.
Watch the 2,754 level because that is the support level from the January price bar.
What is interesting about this sell off is that the short term 30 and 60 minute charts for the S & P 500 are still in uptrends. If the 30 minute chart can cross into a downtrend, this would signify that short term momentum is shifting to the downside.
Pre open, the S & P 500 is trading about 13 points to the downside. If the market opened down 13, it would open around 2,749. Look to see how price reacts around the monthly support level of 2,754.
Earnings continue this week. NVDA reports Thursday, after the close, which should be closely watched.
Here are the Key Levels for the Markets:
$VIX:
Major level: 18.75
Minor level: 18.36
Minor level: 17.58 **
Major level: 17.19 <
Minor level: 16.80
Minor level: 16.02
Major level: 15.63
Minor level: 15.24
Minor level: 14.45
Major level: 14.06
Minor level: 13.67
Minor level: 12.89
Major level: 12.50
The VIX closed at 17.31, closing under the major 17.19 level. To move higher, the VIX will need two closes above 17.58.
I would this the farthest the VIX moves is up to 18.75.
The upper band on the daily chart is 14.84 and the VIX is above it.
With the VIX violating 15.63, it should now be support.
$SPX:
Major level: 2,890.60
Minor level: 2,871.08
Minor level: 2,832.03
Major level: 2,812.50
Minor level: 2,792.98
Minor level: 2,753.93
Major level: 2,734.40 <
Minor level: 2,724.23
Minor level: 2,705.07
Major level: 2,695.30
Minor level: 2,685.55
Watch the major 2,734.40 level. A break under this level and it should become resistance. And a run to 2,656 would be likely.
The minor 2,753.93 level should also be watched.
QQQ:
Major level: 175.00
Minor level: 173.44
Minor level: 170.31
Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25
The QQQ closed at 162.83, closing just above the major 162.50 level. I would expect support here, which mean if it is violated, it should become resistance.
I would expect a test of 162.50 today.
IWM:
Major level: 162.50
Minor level: 161.72
Minor level: 160.16
Major level: 159.38
Minor level: 158.60
Minor level: 157.03
Major level: 156.25
Minor level: 155.47 **
Minor level: 153.91
Major level: 153.13 <
Minor level: 152.35
The IWM closed at 153.83. The IWM is testing the 153.13 level.
The next level under 153 is 150 and I would expect support there.
TLT:
Minor level: 123.83
Major level: 123.44
Minor level: 123.05
Minor level: 122.27 **
Major level: 121.88
Minor level: 121.49
Minor level: 120.70
Major level: 120.31
Minor level: 119.92 **
Minor level: 119.14
Major level: 118.75
The TLT closed at 119.58, taking out the major 120.31 level.
A close today under 119.92 and the TLT should drop to 118.75.
GLD:
Major level: 131.25
Minor level: 130.47
Minor level: 128.91
Major level: 128.13 <
Minor level: 127.35 **
Minor level: 125.78
Major level: 125.00
Minor level: 124.22
Minor level: 122.66
The GLD closed at 126.39. A retest if 128.13 could be possible. Butm watch too see if it can clear this level.
128.90 is the upper band on the daily chart.
The major resistance line at the moment is 128.13. Still resistance until violated.
XLE:
Major level: 81.25
Minor level: 80.47
Minor level: 78.91
Major level: 78.13 <
Minor level: 77.74 **
Minor level: 76.95
Major level: 76.56
Minor level: 76.17
Minor level: 75.39
Major level: 75.00
Minor level: 74.22
Minor level: 72.66
Major level: 71.88
The XLE closed at 72.46. 71.88 should offer support. If this elvel is violated, look for a move lower.
FXY:
Major level: 89.06
Minor level: 88.87
Minor level: 88.48
Major level: 88.28 <
Minor level: 88.09 **
Minor level: 87.70
Major level: 87.50
Minor level: 87.31
Minor level: 86.92
Major level: 86.72
Minor level: 86.53
The FXY closed at 87.75, just under the major 88.28 level, again. A test of 87.50 is possible.
A pullback is an opportunity to buy. 87.50 should still offer support.
AAPL:
Major level: 171.88
Minor level: 171.10
Minor level: 169.53
Major level: 168.75
Minor level: 167.97
Minor level: 166.41
Major level: 165.63
Minor level: 164.85
Minor level: 163.28
Major level: 162.50
Minor level: 161.72 **
Minor level: 160.16
Major level: 159.38
Apple closed at 160.50. Watch the major 161.72 level. A close today under it and Appe could drop to 159.
A break under 165.63 and that level should be resistance.
WATCH LIST:
Bullish Stocks: AMZN, LMT, BA, NOC, FB, SBAC, MA, CME. AMT, ERJ, RF, EGHT
Bearish Stocks: REGN, ULTA, AYI, DIS, JACK, INCY, VNO, SRO, SBUX, HOG
Be sure to check earnings release dates.
