Weekly Stock Market Commentary 10/11/2019

Violent market movements have followed nearly every piece There are both bearish and bullish signals in place, although the bears are being put to the test today.

$SPX has put in two spike lows this month — one at 2892 and one at 2855. Those represent support. More important support levels exist near 2825 (the August lows) and 2720-2730 (the March and May lows). Overhead, there was resistance at 2960, which will be taken out this morning. Above there is a rather massive area of condensed trading in September, leading up to resistance at 3020- 3025 (the July and September highs, which are also the all-time highs).

Equity-only put-call ratios remain on sell signals. There has been fairly heavy put buying throughout this month, even though the market has generally been rallying for over a week now.

Breadth has been volatile as well. The “stock only” breadth oscillator just rolled over to a buy signal on October 10th.

$VIX has given a short-term buy signal as well, since it rose and spiked back down again. $VIX is closing below 17, so that is bullish as well, but it would be trouble if $VIX rose back above 17.

In summary, we have been maintaining a “core” bearish position since $SPX broke down below support at the beginning of October. A close above 2990 would change that. Meanwhile, we are also trading the oversold short-term buy signals that have arisen.

Weekly Charts

S&P 500 (SPX), CBOE Market Volatility Index (VIX), 21-Day Equity Only Put Call Ratio (PC21), and Weighted 21-Day Equity Only Put Call Ratio (PC21 w) charts updated each Friday.

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