Well.... today was not as expected. There is no question that many - including yours truly, were surprised as the market systematically just kept breaking support level after support level.
Yesterday evening I thought it was a somewhat bold call to consider that '2170 was still a threat'. Not only did that break in pre-market, but then 2160/57, and 2150.
Most surprising of all, was to see the market back under the breakout level of sp'2134. Other indexes have different equivalent levels, and are still holding comfortably above them. For instance, the Nasdaq comp' needs to break 5000/4950, which is another 3-4% lower.
Whether you want to blame an apparent nuclear test in North Korea, more fedspeak, or just 'overdue cyclical downside', it doesn't much matter. Today was a major wake up call to traders that summer is indeed over. The rest of the year won't be dull, not least with the added spice of an election.
As for the VIX, we've seen a massive swing from the Thursday low of 11.65 to a weekly settlement of 17.50. The key 20 threshold is clearly within range. It is highly notable that there is a minor price gap in the 18s, and its possible we'll max out there on Monday... assuming the sp' can stabilise within the 2120/00 zone.
Has the sun set on the up wave from the Jan/Feb' lows?
|Sunset - London city, 2.05pm EST|
Across next week, rising support will be around the 2100 threshold. It'll be damn important for the bulls to hold that, otherwise things could continue to spiral ahead of the following week's FOMC (Sept 21st) meeting.
As I have said for some weeks now, my mid/long term view would turn bearish on any price action in the sp'2050s, which would undercut the monthly 10MA.. along with the 200 day MA. Today sure was a surprise, but one big daily decline has not negated the broader upward trend.
Goodnight from London
*the weekend post will appear Sat' @ 12pm EST, and will detail the US monthly indexes