The VIX closed above 21 on back to back up days for the first time since December. That’s definitely a sign to be using further caution here in the market. As we pointed this morning, this market is due for a bounce but we assume they will start getting sold into since the technical backdrop has weakened so dramatically and there isn’t any nearby support. We saw our first sign of that today as the markets initially followed oil higher, which had been up over 0.5%. However, by 1:00 oil rolled over and the market soon followed suit.
Making matters worse, the NASDAQ which hadn’t yet closed below its March lows, did so today. Much to the pleasure of market bears has to be the action in AAPL, which has no officially given up 100% of its post earnings move higher. AAPL closed at its lowest level since March 12th, and the chart suggests it could be on the way down to the $515-$535 range (that was the range from its March 6th bottom). This bearish action in technology is likely to receive a short term boost from Facebook’s IPO. The problem though is that instead of Facebook’s IPO being a catalyst to push tech higher like it would have been 1 month ago, it now has to be the savior that keeps it from falling much lower. Quite frankly, we’re not sure Facebook will be able to handle that responsibility.
Lastly, we’d be committing a crime if we did not mention the action in the U.S. dollar. The dollar traded higher today for the 11th day in a row, finishing at its highest level on an up day since mid January. You may recall from this video, that a rising dollar has tended to have bearish implications for stocks. Given this inverse correlation, and the strength in the dollar to recently, it’s no wonder the market has fallen on hard times. 1,321 (2/2 low) is the next support to watch in SPX and today’s high (1,344.94) becomes resistance moving forward.
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