The markets had the bounce off it's oversold condition yesterday.
I had mentioned yesterday, that I would have preferred to see Friday qualify as a second selling climax, however that is not necessary to turn the markets.
Usually one selling climax can turn the markets, but two is even better.
But, there were a few set ups that can help to predict when the market can turn after a steep sell off.
And I will mention them.
The first of course is our resistance levels.? We were looking for the 2,000 level to hold as support.? Quite frankly, it appeared touch and go on Monday, before the S & P 500 finally settled at 2,000.54.
The second thing to look at, of course, is the VIX.? And Monday as the S & P was closing to the downside, so was the VIX.
This is a divergence and usually signals that a turn is upon us. It may not happen the next day, like it did yesterday.? It
becomes a warning.
And the final fact about this recent bounce was based on the technical indicators.? Namely, the fact that the S & P 500
was trading under the extreme lower bollinger bands on both the 30 minute and 60 minute charts.
As you know, the extreme band settings should contain 99.9% of the price action.? So, when they are violated, you usually expect a move back inside.
The other scenario that the violation of the lower band tells us is that we should expect a retest of the lower bands.
Pre open, the markets are set to open higher.
Here are the key levels for the markets.
VIX:
Major level - 25.00 *
Minor level - 24.21
Minor level - 22.66
Major level - 21.88
Minor level - 21.09 *
Minor level - 19.53
Major level - 18.75
Minor level - 17.96
The VIX again sold off and closed exactly on the 18.75 line.
If the VIX closes today under 21.88, I would expect a retest of 15.63 and possibly 12.50.
Minor resistance should be at 19.53.
S & P 500 Cash Index:?
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
Minor level - 1,984.38 *
Minor level - 1,953.12
Major level - 1,937.50
The S & P closed at 2,036.09 yesterday, so if it closes above 2,015.52, the objective is back to 2,062.50.
2,031.30 should be minor support.? 2,078.10, should be minor resistance.
Nasd 100 (QQQ):?
?
Minor level - 108.60
Minor level - 107.03
Major level - 106.25
Minor level - 105.46 *
Minor level - 103.91 *
Major level - 103.13
Minor level - 102.34
Minor level - 100.78
Major level - 100.00
A close today above 103.91 and the objective becomes 106.25.
103.91 should be a minor support level.
105.47 should be minor resistance.
TLT:?
Major level - 140.63
Minor level - 139.85
Minor level - 138.28
Major level - 137.50
Minor level - 136.72
Minor level - 135.16 *
Major level - 134.38
Minor level - 133.60 *
Minor level - 132.03
Major level - 131.25
The TLT continues to climb higher and closed at 139.47.? Objective should be to 140.63.
Resistance should be 143.75.
From a technical standpoint, the TLT closed above it's upper extreme bollinger band on the daily chart.
This indicates that it is overbought, but it also sets up a scenario that the upper band should be retested after a pullback.
Way overbought now!
GLD:
Major level - 128.13
Minor level - 127.35
Minor level - 125.78 *
Major level - 125.00
Minor level - 124.22
Minor level - 122.66
Major level - 121.88
The GLD closed at 126.68 yesterday.? The objective is to 128.13.
131.25 is a level I would not expect the GLD to break through on this drive.
125 should be support.
The bullish percent index for the gold miners now reads 92.86%.? It is overbought.
XLE:
Minor level - 69.53
Major level - 68.75
Minor level - 67.96
Minor level - 66.41
Major level - 65.63 *
Minor level - 64.85 *
Minor level - 63.28
Major level - 62.50
The XLE is back above 65.63, closing at 66.44.
A close today above 66.41 and the objective becomes 68.75.
65.63 should be major support.
Apple:
Major levels for Apple are 106.25, 100, 93.75, and 87.50.
Apple did close under 93.75 yesterday.? This sets up a scenario that says that Apple should drop lower.
Watch the 93.75 level and it breaks through it, it could bounce up to 100.
Watch list:
Bullish Stocks: MMM, CBRL, CLX, CXO, JNJ, INGR, DLR, HSY, DTE, MJN, DGX
?
Bearish Stocks:? REGN, BIIB, AMGN, GS, FLT, PANW, ALXN, EXPE, CELG, MA, PII, GRA, RCL, COF
?
Be sure to check earnings release dates.
