Technically the Stock Market’s Volatility Looks Short Term

Technically the Stock Market’s Volatility Looks Short Term

Technically the Stock Market’s Volatility Looks Short Term

$DIA, $SPY, $QQQ, $VXX

US equities reclaimed some losses for the week Friday in another volatile trading session.

The S&P 500 gained 1.5%

The DJIA gained 1.4%

The NAS Comp gained 1.4%

The Russell 2000 gained 1.0%.

The S&P 500 covered a wide range of about 105 pts: + 2.2% at its high and – 1.9% at its low.

Stock traders like this market’s volatility, but this cycle technically looks to be short term.

The market is in correction mode, and not necessarily the end of the long Bull Market Rally and start of a Bear-market reversal.

I saw no Key reversal in the trading action since the 26 January 2018 highs.

A correction means a 8-11% decliner from its most-recent highs

A correction is not the same as a Bear market, which is defined as when a stock index or individual stock falls 18-22% from its most-recent peak.

The Bullish market strategists say a correction is ultimately healthy for a market because it removes some of the froth and speculation, flushing out the weak participants chasing quick returns.

That being the case Shayne and I expect this volatility in the market will be short lived.

The market’s main gauge of volatility, the CBOE Volatility Index .VIX, was at 30.5 pts Friday, down 3% from Thursday and well below the 2.5 yr high of 50.30 Tuesday.

The downturn in equities had been long awaited by investors, after a period of strong and fast gains. The S&P’s correction is the 5th of this Bull market. The last bear market was during the Y 2008 financial crisis.

We here at HeffX-LTN see modest gains for Y 2018, more modest than the 19.4% advance for the S&P 500 in Y 2017.

The US economy is strong and in growth mode.

What’s ahead

The recent action has be driven by technical, mechanical, and psychological factors, but the heart of the matter for the US stock market this year will be responding to the Fed’s move on inflation based interest rates.

Volume: Trade on the NYSE came in at: 1.31-B/shares exchanged

  • NAS Comp -0.4% YTD
  • S&P 500 -2.0% YTD
  • DJIA -2.1% YTD
  • Russell 2000 -3.8% YTD

HeffX-LTN US Stock Market Indexes Overall Technical Analysis

Date Symbol Price Technical Analysis Support Resistance
9 February 2018 QQQ 154.07 Neutral (0.12) 145.42 157.55
9 February 2018 DIA 238.67 Neutral (-0.05) 233.34 253.60
9 February 2018 SPY 257.63 Neutral (0.08) 251.57 273.39

Have a terrific week.

 

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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