Markets bounced back from yesterday’s big sell and finished moderately higher, but still on pace for their worst week of the year. While bulls should be encouraged by the bounce, it isn’t anything too exciting as far as I’m concerned. I expected a pretty ho hum bounce coming into today given the huge sell off yesterday and that’s what we saw. Had markets bounced emphatically, by over 1% then that would have been an instance where I might argue that we have a bottom in place. Moving forward I’m watching for some new channels to develop and keeping my eye on a few key levels in the S&P500 (ETF: SPY).
- Watch this level — 1,495-1,505 acted as strong support over the last month or so, now I’m curious to see if it acts as resistance
- GLD bounces back — GLD rose to a 2 week high but the chart still looks net bearish to me
- A big day expected for AAPL — With their investors meeting tomorrow AAPL is due to experience some volatility
Interestingly enough SPX managed to close just above the 1,495 level that has been so key lately. With this close the VIX slumped, falling 11% but still it still remains above the 16 level. Current levels on up to 1,505 is resistance overhead. If we do trade up beyond 1,505 it will have to be with the VIX also falling back near 15 in order to have me believing a bottom is in. I say this because levels in the VIX greater than 16 are associated with wider daily ranges, so a move above 1,505 that still had the VIX elevated wouldn’t take long to see the gains potentially wiped out… exhibit A was yesterday.
As regular readers know, I started getting bearish on GLD when it was struggling to hold onto the $160 level a couple of weeks ago. In a period of 4 days, GLD fell from $159 to $151. In the last 4 days, GLD has since risen from $151 to only $156. While the rally has been nice, it hasn’t been swift enough to change my overall sentiment. You see, in order for people to believe bottoms are in they have to believe they missed the bottom. The fact GLD has taken 4 days to make up just over 1/2 of the losses that it took only 4 days to make does not line up with that thinking. As a result, I expect strong resistance between $156.50-$157 in GLD. A bottom might start to materialize if a move back below $155 is avoided in the next few days.
Another day and another headline. Such seems to be the case with AAPL these days. Today the stock got a jolt after rumors about a possible forward split floated around. In reality though, the rally couldn’t even see the stock close north of $450 so that price is definitely starting to act as resistance. If $450 is not reclaimed tomorrow I suspect a lack of a catalyst from the shareholder meeting will in fact be the catalyst that sees the stock honing in on its 52 week low near $435.
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