In the chart below, I have painted the lines of this market’s support/resistance. I have SP500 resistance lines at both 767 and 816. For certain, this remains a bear market. But with each lower low, it’s becoming a less stressful one to trade. People are getting used to this slow motion government sponsored train wreck – this is the behavioral side of finance.
While this may very well change into the close, the VIX is actually only +2% here on the day at 45.50. On the margin, that’s actually one of today’s surprisingly bullish signals. I have stiff intermediate term “Trend” resistance up at VIX 51.38, and even with Citigroup collapsing we didn’t come close to testing that VIX level. As volatility continues to break down, we should be able to form another trading bottom.
I have SP500 support down at the 733 line. That’s not a lot of downside reward left for me as a short seller, so I’ll be buying/covering on the way down, from here…
Keith R. McCullough
CEO & Chief Investment Officer