Earlier, we said,
“We posted the TRIN and Tick closing readings on the chart that reached panic levels. Most of the panic readings were reached in the 405 to 410 SPY range which in turn suggests support. The more panic in a region, the more fuel the market has for the next rally. Panic is present when TRIN closes above 1.20 and tick closes below -200.
We put the Fibonacci levels on the chart up from the March low. So far the largest retracement has been near the 38.2% which suggests the current sideways move is at the halfway point of the move up. If you do the math, gives a target near 445 SPY range, which about 6% higher.”
Added to the above, we had support previously near the 417.50 range, which was the May high. There are more price highs near the 415 range, which suggests more substantial support. We noted the “Sign of Strength” through the 415 SPY level suggesting a confirmed breakout of that level. Today the SPY tested that level on a lighter volume which suggests support. The uptrend appears intact.
We updated this chart from last Thursday. We said last Thursday,
“The middle window is the 2-period moving average of the VVIX/VIX ratio. This ratio is also good for finding negative divergence near highs in the S&P 500. A negative divergence is present when the VVIX/VIX ratio makes a lower high while S&P 500 makes a higher high. We pointed out the previous divergences on the chart above with red arrows. What we like to point out is that S&P 500 has moved sideways since February while VVIX/VIX ratio has made higher highs and we regard this as a positive divergence. It appears that the VVIX/VIX ratio leads the way for the S&P 500 and suggests higher highs will be seen in the S&P 500.”
Added to the above, the market is heading into Memorial weekend, with markets closed this coming Monday. Most likely, the volume will drop as Friday approaches and the validity becomes less. I do not see signs of a worthwhile high here.