Tech Is Back At The Top

Indicators

Volatility Index (VIX) – Attempted to move higher yesterday, but gave way into the final two hours of trading, dropping 5.4% down to 23.35. Still highly elevated, so a big drop here today, wouldn’t be surprising. Also, hasn’t seen rapid gains over the past four days of trading, despite heavy selling in the market.

T2108 (% of stocks trading above their 40-day moving average): A 45% move Tuesday, sent price all the way up to 17%. Expect further gains today, as the market appears to be finally bouncing after a dismal month of trading.

Moving averages (SPX): The biggest takeaway from yesterday was SPX breaking back above the 5-day moving average. Something that the market has been unable to do over the last nine trading sessions. Today the 10-day MA will be in view.

Sectors to Watch Today

Technology was the market leader yesterday – and a good sign for equities that Tech was back at the top. Energy showing some willingness to bounce but still lots of resistance overhead. Discretionary and Industrials should be targeted today as potential areas of strength in a market bounce.

My Market Sentiment

I am looking for follow through today on SPX, and the first day of consecutive gains for the market in the month of October. The market, should it hold its opening gap, is poised for a major move, as little short-covering has been seen in this market, relative to the amount of selling we have seen so far this month. Some support in the chart below has finally been found for the market, though I wouldn’t trust the market that this is anything beyond a dead cat bounce.

S&P 500 Technical Analysis