As I mentioned yesterday, a narrow range doji candle can often lead to a range expansion and that is what happened yesterday.? Investors all seemed to be waiting for a comment from the Fed about interest rate hikes this year.
The S & P 500 ended up having an almost 28 point range yesterday.? This was around seven points greater than the 21 point average true range for the market.
An expansion usually follows a contraction.? And that is what happened.
The issue was can you determine a directional bias?
That is where the VIX can become helpful.? The VIX opened at 15.74 yesterday, just 11 cents above the 15.63 resistance level.? From there it proceeded to close under the 15.63 level and headed down all day.
As the VIX heads down, the markets should move up.
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As for the S & P 500, it bottomed at 2,028.31, just 3 points under the previously identified support level of 2,031.30.? As the VIX reversed and headed down, the S & P closed back above 2,031.30 and ran up to a high of 2,055.91.? This is now within reach of the 2,062.50 major level.
This is why I always say these resistance levels are areas where potential reversals can happen.?
Look for the 2,062.50 level to be breached. The next major level will be 2,078.12.? Also, the VIX is almost at it's major support level, which is 12.50.? How it reacts around this level will tell us what will happen in the markets.
Here are the key levels for the markets.
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VIX:
Major level - 25.00
Minor level - 23.44
Minor level - 20.31
Major level - 18.75
Minor level - 17.19 *
Minor level - 14.06
Major level - 12.50
With a close under 14.06 yesterday, that level should now act as resistance.
15.63 should also be resistance.
S & P 500 Cash Index:?
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
Minor level - 1,921.88
2,062.50 should be the objective. 2,070 could offer some resistance.
For the S & P 500 to move up to the next level, it will need two closes above 2,078.12.
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
The QQQ stopped at 106.73 yesterday, before reversing and closing at 109.52.
It closed 14 cents above the 109.38 support level.?
Two closes above 110.16 and the objective is now 112.50.? Look for lower levels to act as support.
TLT:?
Minor level - 132.03 *
Major level - 131.25 *
Minor level - 130.46 *
Minor level - 128.91
Major level - 128.13
Minor level - 127.34
Minor level - 125.78
Major level - 125.00
The TLT almost hit the 131.25 objective yesterday, coming within 16 cents of it.
130.46 should be support.? For the TLT to move higher, it will need two closes above 132.03.
GLD:
Major level - 125.00
Major level - 121.88
Minor level - 121.10
Minor level - 119.53
Major level - 118.75 *
Minor level - 117.96
Minor level - 116.41 *
Major level - 115.63
The GLD also moved up and closed one penny above the 118.75 level.? To move higher, it will need two closes above 119.53.
XLE:
Major level - 65.63
Minor level - 64.85
Minor level - 63.28
Major level - 62.50
Minor level - 61.72 *
Minor level - 60.16
Major level - 59.38
The XLE held support and closed at 61.80.? This was just 8 cents above the 61.72 level.
Look for a move up to 62.50.? And lower levels should act as support, namely 61.33 and 60.94.
Apple:
Major levels for Apple are 112.50, 106.25, 100, 93.75, and 87.50.
Apple was up $2.49 yesterday or 2.37%.? It closed at $107.68.? This is just under the 107.81 level.? It will need two closes above 107.81 to move up to 112.50.
$109.38 should offer resistanmce the first time it is tested.? If Apple breaks through that level on the first attempt, it will be showing a lot of strength.
Watch list:
Bullish Stocks: ACN, BCR, FB, JNJ, UPS, VMC, ITW, NOC, XOM, LNT
Bearish Stocks: GD, JACK, LULU, BURL, BLUE, SHLD, KR, AZN, ALDR
Be sure to check earnings release dates.
