Discover more from Trading Adventures
3 (more) things to watch this week in the SP 500
Three things to help build the bullish case for $SPX
Yesterday I laid out three things I wanted to see in order to feel more bullish about the overall market. Today those 3 things happened, and they happened with force.
✅$SPX SP 500 to stay above 4278
The SP500 rallied to close today at 4515.47
✅$SPX SP 500 to retake the 200 day simple moving average
The 200 day simple moving average is below that level at 4436.69
✅$VIX index to keep dropping
$VIX tanked more than 9% and closed at 25.13
That doesn't mean that we're out of the woods and that the bears have gone back into hibernation. Some of the strongest rallies happen within the confines of an overall downtrend. But it is movement in the right direction.
So what do we need to watch for now?
Slower, rising action up through 4510-4535 and over the 21 day exponential moving average
5% + in two days is a big move. While I wouldn't be surprised to see a "day 3" move similar to today and Friday's magnitude, I don't want it to go too far too fast. Markets love to overdo things and move from one extreme to another. A steadier move from here could lead to more stable and sustainable upside continuation. Perhaps more important than the speed of the move is that price gets above and stays above that range, 4510-4535.
A big "day 3" pop followed by a rest
Either way, #1 or #2 is fine with me. The effect is the same, and that is not going too far too fast.
$VIX index to stay between 20-25
The $VIX came down with as much force as the $SPX SP500 went up. Further decline is fine, but it doesn't have to crash. Staying rangebound between 20-25 should be constructive
***This is NOT financial or trading advice of any sort. NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.