Bulls Rebound but Resistance Looms
The bulls are trying to get off the mat following a rough August as today's gains, if they hold, will be the biggest of the month. Kind of hard to believe but the bears are still hungry.
The Fib heads are still expecting a test to lower levels and from time-to-time we will talk about Fibonacci Retracements which are ratios used to identify potential reversal levels following new highs or breakouts in the market or stock. The most widely used Fibonacci Retracements are 61.8% and 38.2%. For the S&P 500 the 61.8% level is at 1,625ish following the recent highs.
We will talk more technical jargon in this weekend's Weekly Wrap but for now let's look at some other indicators.
The S&P 500 Volatility Index ($VIX, 14.40, down 0.70) is back below 15 and a close under this level would be slightly bullish.
After testing 2.9% yesterday, the 10-year Treasury Note ($TXN) is pulling back but is still above 2.8%. We have warned a close above 3% could be bad for stocks but for now this reading is bullish as long as it keeps reversing.
As far as the indexes, the Dow did dip below 15,000 to 14,992 on the open and is currently up 53 points to 15,064. A close above 15,100 would be bullish.
The S&P 500 is higher by 11 points and has cleared 1,650 to 1,657. The Nasdaq is advancing 34 points to 3,623 but needs to clear 3,625 on the close.
The Russell 2000 is surging 16 points to 1,029 and has cleared 1,625 that served as prior support.
With the Fed minutes on deck for Wednesday's action, we expect volatility to get even more extreme so our focus is on the VIX and the 10-year T-note, along with key support and resistance levels.