View previous analysis:
- SPX500 rounding top in the making
- Indices continue to look heavy
The S&P500 has shed over 170 points in the past four session alone. When you consider it has a tendency to move 10-15 points per day this should help you visualise just how volatile markets have been these past few sessions. Trading just above 1920 at the time of writing there is potential for a bounce higher as it clings on to the October 2011 trendline. However due to the bearishness of the decline I am of the view it is just a matter of time before this trendline gives way.
The indicator at the bottom of the chart shows the daily & changes. Interesting to note that the Index tends to bounce higher when you have seen it sell-off over 2.5% on multiple daily sessions. Whilst this is most definitely not a reason to buy the index it should at least make you think before entering short, after hearing from every news source about the stock markets crashing (which also tend to occur at turning points).
Breaking above 28, the Volatility Index (VIX) is at its highest since October 2014. Also interest to note that this is the same month the S&P500 bounced higher from the 1812.75 lows. Again, this is not a reason to buy, but something worthy of noting before you bet the house on continued losses this week.
And finally we see the putt/call ratio is above its 4th standard deviation, which is higher than it was when we saw the bounce higher in Oct 2014. For now, I am standing aside and awaiting to see if we get the bounce higher before seeking areas of resistance to sell into. Alternatively see if we can break the October '11 trendline before seeking bearish setups.