We updated this chart from yesterday. The short-term picture leans bullish as the VIX remains below +17 with the current reading coming in at +14.69. What we said yesterday remains in force:
“The bottom window is the weekly VIX going back to early June 2021. It's common for the SPY to trend higher when the VIX is below 17. The VIX current reading stands at 14.82 and near a 2 ½ year low. VIX has generally been below .17 since early April and below 17 continually in the last couple of weeks. This evidence suggests that the SPY is in a trending mode that could last weeks if not months. Support now lies near 420 range on the SPY. We were long SPX on 12/20/22 to 1/27/23 for a gain of 6.51%; long again from 2/6/23 to present for a +6.9% gain; totalling over 13.41% so far this year.”
The bottom window is the 10-day average of the TRIN. It’s common for the SPY to stall if not reverse when the 10-day average of the TRIN reaches .80 and lower. We identified those instances with red lines. The current 10-day average of the TRIN stands at .93 and is an area where the SPY can continue to rally. This indicator near .80 is something to watch for which in turn could lead to a bearish setup.
