Looking Ahead

The S&P500 crumbled from fresh record highs last week.  The VIX spiked to levels not seen since the election in 2016.  Is the summer swoon upon us?  Or is this just another named excuse for the markets to refresh?

Small caps.  It's all about the small caps moving forward.  They led the market out of its pre-election 9 day slide in November, and they were in a tailspin heading into last weeks decline.

$IWM rests at channel support as does the $SPY.   The VIX is sporting one of its infamous spikes.  On a long enough timeline all of these VIX spikes get reversed.  At some  point it will be different 'this time' and the VIX will remain elevated.   I still think that sub 9.00 paint a few weeks ago will be hit again in 2017.  The path was cleared.  However all the talk of the low volatility and market complacency reached a tipping point.

Last weeks North Korea tensions were the perfect excuse to take the markets lower.   Every single named excuse to sell has ended up being a tremendous buying opportunity.  I think this time will be no different.

If nuclear war breaks out its not going to matter whether you sold your $AAPL position.  And if it doesn't the stock market remains buoyant as Central Banks see low inflation as a threat to the global economy, and are in no rush to remove their 8+ years of unprecedented asset price augmentation.

With that the question heading into this week is will the market bounce now or later?

Let's watch the VIX closely.  The late Friday spike didnt bring down asset prices as much as you would think.  The VIX and the market were higher into the close.  Not something we've seen very often.

But what we have seen very often is a smack down of high VIX reading.  Odds are we are nearing that smackdown point.

The $SPY came right down to the election support line.

$IWM also is nearing support.  That $136 level is a key foundation for the post election channel.



Is the top in?

The Top Is In!


More than likely we have not seen the top for this bull market yet.   The question heading into this week:  Is the pull back over?  Or is there more downside ahead?

We will get an early indication.  If the market can hold Friday's close, and the VIX gets smacked back under 15, there is a good chance we have seen the lows for this pull back.    On the other hand a quick break of support will set the VIX up for a move over 20 and the $IWM $132, $SPY sub $240, $QQQ $138.    At which point the market will more than likely embark on another swift reversal higher.



Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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