Higher Stock Prices - Higher Volatility

Dec. 11, 2012 12:46 PM ETSPY, VXX
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Contributor Since 2012

Accidental Quant and Founder of Level 3 Data Buying & Selling Pressure Editor of Level 3 Data ETF Quant Report Daily Contributor Yahoo Business News

Stock Market Today: Last Friday's better than expected jobs report pushed the S&P 500 Index (SPX) above the 1413 ledge. Our target for the SPX is now 1433.

This is a news driven market with a higher level of volatility. The market drops or rallies every time a senator has a press conference about the fiscal cliff negotiations in Washington.

The FOMC is also meeting this week and is expected to expand its balance sheet to alleviate the mistrust of Washington.

Keep an eye on the1413 level which is now acting as support. Whoever wins this battle wins the war between the bulls and the bears.

Level 3 Data ETF QUANT REPORT: Neutral on stocks SPDR S&P 500 (SPY) and Long volatility S&P 500 VIX ST Futures (VXX).

Previous 3 Week's Exits: 27 of 30 trades were exited profitably week with an average gain of +1.41%.

RECAP: December 7th: "Higher Volatility"

The volatility between the high and low of the day increased Friday. The high of the day was 1420.37 (our level was 1419.41). The low of the day was 1410.87 (our level was 1410.18). See the 12/07 levels and comments.

The SPX gapped higher at the opening and then traded 10 points lower before retracing to close at 1416.75. The SPX is sitting comfortably above the 1413 level. Watch this level to act as support.

LEVELS: Today December 10th S&P 500 Index (SPX):

Key resistance level for SPX: December 10th - 1420.45, 1427.00

Key support level for SPX: December 10th - 1412.93, 1411.73, 1406.65















VXX - VIX Volatility: Level 3 Data ETF QUANT REPORT: Buy Signal 12/01 at $30.00 with a target exit at the 0-line of $31.50. The buy signal indicates Selling Pressure Exhaustion, higher volatility and lower stock prices. The VXX measures CBOE market volatility index often referred to as the fear index. It represents one measure of the market's expectation of stock market volatility.

THE MOST LIKELY TRADING SCENARIO for VXX is to spike up into the $31.50 range and any negative news on the economy and the fiscal cliff.

Level 3 Data ETF QUANT REPORT is Long the VXX.

Level 3 Data Buying Pressure VIX

SPY - S&P 500 ETF: Level 3 Data ETF QUANT REPORT: Neutral. It appears the 0-line of $140.48 is safe for now. As long as this 0-line holds our target for the SPY is $143.90. The current rank is -0.46. Dips are to be bought as long as the $140.48 holds. A neutral rank on the SPY means higher volatility.

Level 3 Data ETF QUANT REPORT is neutral on the SPY.

THE MOST LIKELY TRADING SCENARIO is that we have seen the highs of the year of $148.11. The series of lower highs and lower lows will most likely continue. We rebounded off the $134.70 bottom to safely close above the 0-line of $140.48. If the fiscal cliff issue is not resolved the $140.48 support will most likely break down to retest $134.70 low. Our short term target is $143.90. Watch the Level 3 Data Quant Report Video.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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