After last week's brutal sell-off, the S&P 500 moved quickly to key inflection points. Many indicators and support levels are lining up in the same fashion and could very well provide us with a new trend or continuation of our current trend higher.
1). Linear Regression channel suggests we are sitting at the lower range and has given us a buy signal in the past.
2). Overlaying Bollinger Band's - both 2 and 3 standard deviation - shows us we are at an extreme level of oversold in relation to prior movements
3). BB %B (20, 3 stdev) is also flashing extreme oversold levels. Levels that we have not seen on a daily chart since April of 2000.
4). RSI has weakened significantly and has reached previous areas of new buying interest around the 35 level.
5). We have tagged the upper portion of the Ichimoku Cloud which has provided the market support in the past.
6). Immediate-term pivot point resistance can be found at $177.32
Additionally, VIX term structure has moved into backwardation which is only seen roughly 15% of the time since VIX has been trading. Traders are more worried about short term volatility then mid or long term. This is usually seen as a short term top in volatility.
Conclusion:
We could see an immediate bounce back to prior areas of interest but the market will determine whether it can be bought or should be sold. Watch the market intra-day for your next move and be prepared to adjust your exposure accordingly.
1). Linear Regression channel suggests we are sitting at the lower range and has given us a buy signal in the past.
2). Overlaying Bollinger Band's - both 2 and 3 standard deviation - shows us we are at an extreme level of oversold in relation to prior movements
3). BB %B (20, 3 stdev) is also flashing extreme oversold levels. Levels that we have not seen on a daily chart since April of 2000.
4). RSI has weakened significantly and has reached previous areas of new buying interest around the 35 level.
5). We have tagged the upper portion of the Ichimoku Cloud which has provided the market support in the past.
6). Immediate-term pivot point resistance can be found at $177.32
Additionally, VIX term structure has moved into backwardation which is only seen roughly 15% of the time since VIX has been trading. Traders are more worried about short term volatility then mid or long term. This is usually seen as a short term top in volatility.
Conclusion:
We could see an immediate bounce back to prior areas of interest but the market will determine whether it can be bought or should be sold. Watch the market intra-day for your next move and be prepared to adjust your exposure accordingly.