Good Evening,
I hope everyone had a great trading day. SPY was down 1.65% to close at 431.39 and we are just a little bit above SPY 430. I have mentioned SPY $430 on more than a few occasions because this is exactly where we were expecting to go on the breakdown and why I went to cash today other than the 100 AVGO short, we are in cash because like I said, SPY 430 is a very critical support level we could see 428-427 and if we break SPY 427 there is a gap at 423 and the next Critical support is at 420 so If we break below 430 and if we continue lower, then we’ll be looking to fill the gap at 423 and then 420. If we start breaking 430 and closing below it, that’s going to increase the probabilities of going back down to retest the lows. There is a strong possibility that we bounce off 430 because we’re pretty oversold and we closed outside the Lower Bollinger band which is typically a level we get a bounce from. If we bounce from 430 look for a quick run to close the gap at 438.
The NASDAQ 100 Triple Q’s were down 1.83% today to close at 357.86 and the triple Q’’s broke below support at 361 and as I mentioned last night the next level of support is at 355. It is possible we bounce up towards 361 or the gap fill right around 364 and then still go hit 355 or possibly even 347. Just like SPY the QQQ’s are oversold closing below the lower Bollinger band and as I mentioned 355 should be strong support but it’s possible, we go all the way to 347 but knowing we’re very oversold, don’t be surprised if we get a lower high bounce before we continue any lower. In order to get bullish at this point, we need to get all the way back above 370.
On the VIX, we were up nearly 16% today and the VIX had the second day in a row above 15. So we are starting to see that high fear and the high panic and the high volume selling which is exactly what we were expecting. So VIX above 15 tells you be cautious and respect the downtrend because as you likely already know, bears take the elevator down and things can move very fast to the downside when everybody is panic selling. Resistance on the VIX is around 18. VIX closed above the upper Bollinger so we could have a VIX crush Friday!
Stay Tuned and expect continued volatility.
Open Positions:
Short 100 AVGO
Long INTM Broadcom PUTS
Cheers,
G. Allan Collins
