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Market Outlook: Near Key Levels on SPX, DJIA, and VIX

|Includes: DIA, QQQ, SPY, SPY, iPath S&P 500 VIX Short-Term Futures ETN (VXX), VXZ
MARKET TIMING:
STOCKS:
Bullish (as of 10/08/09 close)
GOLD:
Bullish (as of 05/2/09 close)
BONDS:
Bearish (as of 10/16/09 close)


The market data above comes from our BigTrends Market Timing, a systemized timing model developed by Price and our analysts.  All subscribers to our premium advisory programs receive the Market Timing each trading night.  In addition, it is available as a standalone subscription (with nightly charts and commentary) - call 1-800-244-8736 for information.

As earnings season continues, we've reached some key levels on both the S&P 500 Index (SPX) (NYSEARCA:SPY) and Dow Jones Industrial Average (DJIA) (NYSEARCA:DIA). 1,100 on the SPX and 10,000 on the DJIA are levels that must hold, if we are to continue to rally to the upside.  Overall, we haven't been vastly impressed by the market's reaction to various earnings reports ... it looks like expectations may have been a bit high.

Taking a look SPX Daily Chart below, you can see that we've had some trouble overtaking the 1,100 level this week.  Many are keying on the 1,100 to 1,150 area on the SPX as an important technical area and possible resistance.  The underlying trend does continue to look to be to the upside, however, as Percent R is strong ... and we've bounced after every market pullback in recent months.

SPX Daily Chart
wmo102109spxd

The Dow Jones Industrial Average is also around a key level, one that many in the major media and "armchair" traders are watching:   10,000.  You can see in the following chart that overtaking 10k would put us back near the pre-October 2008 levels.  Weekly Percent R remains in strong territory on the DJIA, indicating the underlying trend is still bullish. 

DJIA Weekly Chart
wmo102109djiaw

As far as volatility, we saw the CBOE Volatility Index (VIX) break down to new medium-term lows recently.  Today, the VIX nearly penetrated the 20 level on the downside, only to bounce higher.  It now looks as if we are in a 20 to 23 range on the VIX for the near-term, with upside contained in the 24/25 area.

VIX Daily Chart
wmo102109vixd


Bottom Line:


MARKET TIMING:

STOCKS:
Bullish (as of 10/08/09 close)
GOLD:
Bullish (as of 05/2/09 close)
BONDS:
Bearish (as of 10/16/09 close)


Trade Well,
Price Headley
,
BigTrends.com
1-800-244-8736

Disclosure:  Currently in a long Gold stock option position for Options Shark subscribers.