Earlier today, Brian Reynolds outlined how the financial markets are at a crossroads. The technical indicators suggest the same.
As you know, I have been pretty neutral on the near-term for the last few weeks. I felt the market had spiked and was unlikely to surge higher in a sustainable way, absent any pullback. Now that the consolidation has taken place, the ducks are lining up to suggest a move to either the upper end or lower end of the trading range highlighted in this morning's article.
One of those ducks is quacking that a move of some sort is coming is the Volatility Index, or VIX. The VIX has dropped down to 26.64 today. Since the October low, any reading in the 26 area has been a signal for a pending decline. A bounce there would likely bring in sellers, and that could cause a drop toward the lower end of the trading range. Also, a move through it would likely kick start a rally to the upper end. One way or another this market is likely to move soon -- in the context of a market likely to stay in the range. I just don't know which direction.
The S&P 500 is unlikely to stay in dead center of range for long...
... Especially with the VIX testing a key support area
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