S&P 500 Nears’ inflection point as volatility touches – see that market

The markets were soon to peak. I keep an eye out for February 18-19, as the S&P 500 Index and NASDAQ Composite could still push a little higher to satisfy daily Demark figures.

Risk / reward is bad, so look out to sell any rally this week.

S&P 500 ETF (SPY) Trading Outlook (3-5 days): Mild bullish, risk / reward poor

The $ 393 price level looks important, and I’m skeptical that $ 400 will be exceeded. I want to sell to the $ 393- $ 397 range.

Price support is at $ 387.50, and a move below this level would be a warning. Any break of $ 385 will result in additional sales.

All in all, much of the market’s performance next week depends on market volatility … and when it arrives. Let’s look at the VIX Volatility Index.

The VIX Volatility Index still differs positively, but a flush looks possible 2-3 days before the bottom.

The implied volatility has held up in a pretty resolute way lately, as the rapid rise has come in the midst of all the turmoil has not resulted in the kind of decline in implied volatility that most would expect. VIX is still well above last February low and I see this technically as a positive for IV, not something that necessarily needs to run “vol” down to new lows just because S&P hits new heights.

However, the last few days of “marking” have not really resulted in very general injuries, and VIX has given some signs that a final rinse may occur in the next few days. One must be wary of this as it must constitute a VERY attractive opportunity to buy implied volatility in periods ending in June and for the aggressive until March expires. Any big pullback in “vol” Friday to next week is something I will look to take advantage of by adding to the June VIX call spread.

If you are interested in seeing updates on the market within the day on my private twitter feed, please follow @NewtonAdvisors. You are also welcome to send me an email at [email protected] about how my technical work can add alpha to your portfolio management process.

Twitter: @MarkNewtonCMT

The author holds positions in the said securities at the time of publication. All opinions expressed herein are solely those of the author and in no way represent the views or opinions of any other person or entity..

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