The markets are closed on Monday but judging by the volume we saw today most people started their long weekend early. There wasn’t much direction to the market as the S&P500 continued to trade in a tight range. SPX appears to be digesting two things right now, the pullback off of the the recent 1,415 high and the subsequent bounce off of the 1,291 low. Evidence of the tight range showed up in the VIX, which traded in its tightest range today since March.
Typically periods of low volatility have coincided with bullish price action in the market but we caution against taking that view here. Why? Because this isn’t just normal low volatility, this is low volatility after a period of very high volatility. In other words, the high volatility is holding its gains, similar to how a stock might after a big run up. You can see this very well on a chart of the VIX.
So while the bulls did seem to have built some momentum the last hour of the day the last 2 days coming into this morning, SPX stalled out at its high from yesterday. Like the top that fell short of this weeks high yesterday seemed to serve as a short signal, the same can be said for the apparent double high that occurred today vs. yesterdays high. In addition, oil was again unable to extend much past the break even line and the Dow Jones Transportation index was rejected at resistance just past 5,100.
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!
- SH @ the close 2/24/12: Markets sleepwalk into the weekend
- SH @ the close 10/28/2011: Markets take a breather; SPX up for 5th week in a row
- SH @ the close 11/3/2011: Key support levels hold, markets reap the benefits
- SH @ the close 3/16/12: Stocks muddle into the weekend
- SH @ the close 12/1/2011: Markets take a breather, SPX/VIX flash familiar pattern