Markets continued to advance with the S&P500 running back into resistance at the previous all time high of 1,576. Importantly though, SPX extended to move above 1,562. 1,562 may seem arbitrary, but it’s actually the midpoint of last week’s range in SPX. Given that last week was the worst one for the index all year, I believe it is a significant price level. Theoretically, above 1,562 and the majority of those who bought last week are in the green, while the majority who got short are in the red. Below 1,562 and those roles reverse. Keep your eye on 1,562 on any weakness between now and the end of the week as it could be a good tell going into next week.
- All eyes on AAPL — AAPL will report earnings after the bell and will surely have a ballyhooed session tomorrow
- Examining the VIX — The VIX is down 24% from its recent high, but up 24% from its 52 week low
AAPL will go into its after hours earnings release in a similar situation to its last one: rebounding from a breakdown below a key level and in need of a major earnings beat to propel the stock higher. In January, $500 was the key level AAPL had broken, this time its $400. If you look at last week you’ll notice that 4/17 saw the highest volume day for AAPL since January, and 3rd highest of the year overall. That means the most buying that has gone on since January in a single day occurred between $420-$398 (based on the price range from 4/17).
Therefore, AAPL will need to solidly trade above $420 tomorrow in order to make those who took positions last week feel good about their positions. A gap up that doesn’t exceed $420-$430 will likely have those who did take positions last week heading for the exits as they’d prefer the safety of the sidelines to the danger of AAPL’s recent downtrend. In the event AAPL misses, $350 looks like a viable destination given that that is the 50% retrace of the all time high around $700.
Been a couple sessions since I examined the VIX and with it pretty much in the middle of its recent range I thought now was a good time to take a look. The last time the VIX was at this 13.70 level SPX was right around 1,575. Well here we are again and SPX is right around the same level. Overall that’s healthy to me but not as bullish as it could be. If the VIX was a little higher than it is now and SPX was back up here it would represent a contrarian bullish signal to me because it would mean the market is jittery even though we’re so close to new all time highs.
I’m going to give you a level to start watching on the VIX: 14.63. That level represents, wait for it…. the midpoint of its recent 52 week low of 11.05 to its recent 30 day high of 18.21. Taking 14.63 in combination with 1,562 on SPX and you can formulate a pretty good trade set up in reaction to what the market may do over the next few days. If we maintain above SPX midpoint and below VIX midpoint then to me I’d look for a continuation of this rally and target a test of 1,600. If you prefer to get short right here, right now, then you’d want to see SPX stall out right around here (as these are the previous all time highs) and see the VIX work its way back above the midpoint by the end of the week.
Did you know that you can watch Stockhaven trade live in real time?
Learn how to daytrade by watching someone else trade! Watchhimtrade.com is the only site that lets you look over the shoulder of a professional daytrader.
Watch this video now where he shows you how it’s possible to make 100% in just 5 minutes!