It appears that this highly awaited pullback is beginning.? The S & P 500 is selling off before the open and is down about 16 points.
Yesterday, the S & P hit a high of 2,074.02, within three points of the next level.? It seemed to try and stabilize when it hit a low of 2,062.57, just seven cents above the major 2,062.50 support level and managed to close at 2,066.13.
A major negative from yesterday was that the down to up volume jumped up to 2.92, from a reading of just .88 the prior day.? This is signifying that selling is coming into the market.
But, as I have said, profit taking after a run that this market has had would not be unusual.?
Since the bottom in early February, the S & P 500 has gained 15%.
The question now is what would confirm an intermediate top and where should a pullback stop?
Is that one question or two?
First, for a reversal in the VIX, I would expect two closes above 14.06.? And yesterday, the VIX traded above 14.06 virtually all day before dropping and closing at 14.12.? This is interesting because when I checked the closing price of the VIX yesterday, is was exactly 14.06.? It must have changed sometime after the close.
This means that we have had one close above 14.06 and if the VIX closes above that level today, I would expect it to head higher.
As for the S & P 500, it will need two closes under 2,046.88.? If that happens, then a retest of the 2,000 level would be expected.
As a final comment, I would not expect a pullback to go further than the 1,937.50 level.
There are a couple of reasons for that which I will discuss on tomorrow's webinar.
And again, if you have any topics you would like me to discuss, please email me at davismdt@gmail.com and I will try and address your issues.
Here are the key levels for the markets.
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VIX:
Major level - 25.00
Minor level - 23.44
Minor level - 20.31
Major level - 18.75
Minor level - 17.19
Minor level - 14.06 *
Major level - 12.50
No need to rehash what to look for in the VIX.
Short term there is resistance at 15.63 and then at the 17.19 level.? A break above 14.06 and it should act as support.
S & P 500 Cash Index:?
Major level - 2,125.00
Minor level - 2,109.38
Minor level - 2,078.12 *
Major level - 2,062.50
Minor level - 2,046.88 *
Minor level - 2,015.62
Major level - 2,000.00
With an expected open under 2,062.50, it should now act as resistance.? 2,046.88 should be a key level to watch.? As I mentioned two closes under that level and the S & P should drop to 2,000.
Short term there is a support level at 2,054.70.? A break under that level and it should also act as resistance.
Nasd 100 (QQQ):?
Major level - 112.50
Minor level - 111.71
Minor level - 110.16 *
Major level - 109.38
Minor level - 108.60
Minor level - 107.03
Major level - 106.25
Minor level - 105.46
Minor level - 103.91
Major level - 103.13
The QQQ hit a high of 110.43 yesterday.? This was just 27 cents above the 110.16 level, before the QQQ settled at 109.94.
To move down to 106.25, the QQQ will need two closes under 108.60.
Still in uptrends on shorter term intra day charts.? This should tell you to expect bounces off of support.
TLT:?
Minor level - 132.03 *
Major level - 131.25 *
Minor level - 130.46 *
Minor level - 128.91
Major level - 128.13
Minor level - 127.34
Minor level - 125.78
Major level - 125.00
The TLT closed at 130.76 yesterday.? Still trying to get above the 131.25 level.
Support should still be at 130.46 and 128.91.
To move higher, the TLT will need two closes above 132.03.
GLD:
Major level - 125.00
Major level - 121.88
Minor level - 121.10
Minor level - 119.53
Major level - 118.75 *
Minor level - 117.96
Minor level - 116.41 *
Major level - 115.63
Minor level - 114.85
The GLD is oversold on a short term basis.? Two closes above 116.41 and the GLD should try and retest 118.75.
117.97 should offer resistance.
XLE:
Major level - 65.63
Minor level - 64.85
Minor level - 63.28
Major level - 62.50
Minor level - 61.72 *
Minor level - 60.16
Major level - 59.38
The XLE did close under the 61.72 yesterday, so the objective to the downside should be 59.38.
I would expect 59.38 to be strong support.
If the XLE does break under 60.16, expect 59.38 to be hit.
Apple:
Major levels for Apple are 112.50, 106.25, 100, 93.75, and 87.50.
Apple came within 31 cents of the 112.50 objective.? It is approaching the midband on the daily chart, which is 113.77 and should be a level of resistance.
Lower levels should still act as support.
Watch list:
Bullish Stocks: LMT, BCR, NOC, ULTA, MMM, AVGO, BDX, STZ, KMB, HD, THS, EW, PLCE, ATO, RS, GIS
Bearish Stocks: CMG, AGN, BWLD, DE, GD, FOSL, SKX, VRX, CRR, SHLD, CONN
Be sure to check earnings release dates.
