The index ETF’s gapped up pre market and for the most part have done a good job holding onto those gains. From yesterday’s low of 1,538 to its current perch at 1,557 SPX has bounced over 1%. We could be setting up for some consolidation here the next week or so, as next week is a 4 day trading week so I expect volume to be light. The range I’m watching is 1,545-1,565.
- I’m expecting range bounce action — Given the drop in the VIX and the tightest range in SPY since 3/7 (as of 11:10 am est) I expect tighter ranges in the immediate term
- VIX takes a tumble — Like so many other times the last few months, the VIX’s spike higher resulted in an equally impressive spike lower
- AAPL $450 — If AAPL is to maintain the tradable bottom that looks to be in place, there is no reason for it to go below $450
The lines in the sand have officially been drawn over the last 5 trading days in my opinion. On the low end we saw key support at 1,538 hold yesterday while all time high resistance at 1,565 has continued to be a ceiling. If you go back to Mon-Wed of last week you’ll see SPX put in low of days right around 1,547-1,548 on those consecutive days. On the other end of that spectrum is the 3 consecutive high of days in SPX between 1,560-1,563.
As a result of this action between 1,547-1,563 I’m expecting channel action between 1,545-1565 (added 2 points each way to allow for piercing action). I expect that if the channel gets resolved one way or the other, that will signal the next directional move. I.E. above 1,565 and 1,575 is the next stop, below 1,545 and 1,530-1,530 is the next stop (I don’t have confidence 1,538 will hold again if tested). In the mean time I’d play the channel.
One thing to note is on the gap up today and yesterday and the gap down on Monday, there was no extension above SPY’s initial 3 min high or below its initial 3 min low. In the event we continue to gap pre market, watch for an ability to indeed extend above/below that first 3 min high/low within the first 15 minutes of the day if SPY is to make a meaningful directional move that day. If that ability is not displayed my play is to short the gap higher for some intraday pullbacks and go long the gap lower for some intraday rallies.
So much for the VIX’s 36% rally this week (from Friday’s close to yesterdays high) as it now stands at a 12% rally. While that’s still 12% higher than last week, it’s also 18% lower than yesterday’s high. This is a very familiar occurrence in the VIX for what seems like the last 18 months. The VIX makes these huge runs, without SPX technically breaking the key support level which leaves the VIX vulnerable to being hammered back down. Simply a return to 2013 normalcy here, expect VIX 11-12 and don’t believe in a VIX rally until you see consistent green closes in the 14-15 range or higher.
$450-$451.97. That’s the range I’m watching on AAPL. After a 7% rally off of the $419 52 week low many are being to speculate that AAPL has FINALLY carved out a bottom. While I do believe a tradable bottom is in place, I don’t think THE bottom is in place. My reasoning is simple, AAPL spent 4-5 days in the $420′s, if you look at past major bottoms, it never stayed near the bottom for that long.
At any rate though, the recent uptrend has come on decent volume which is a good sign, and it also experienced 2 gaps higher that held to go along with it, another good sign. If this uptrend is to remain in tact and result in a further move towards $475, then there is no reason for AAPL to below $450. $451.97 is also severely important as that level represents the midpoint of AAPL’s post earnings drop high of $484.94 and its 52 week low of $419. In other words, above $450-$451.97 and expect continued upside, below it and be open minded to the fact that a new 52 week low could be right around the corner.
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