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Market Holds Gains But VIX Stays Elevated

Market Holds Gains but VIX Stays Elevated

9:00am (EST)

The bulls got a win for only the third time this month thanks to an overnight turnaround in the futures market. The bears haven't gone anywhere as they held resistance despite Monday's snapback rally. The major indexes fell short of clearing their 20-day MA's (Moving Averages), with the exception of Tech, as volatility actually increased heading into today's Fed meeting.

The Dow surged 129 points, or 0.8%, to close at 15,884 on Monday. The blue-chips traded to a high of 15,930 and we mentioned we wanted to see a close above 15,900. Support is at 15,800 with risk down to 15,600 while a close above 16,000 would be bullish.

The S&P 500 soared 11 points, or 0.6%, to settle at 1,786. The index reached a peak of 1,792 and missed our go target of 1,790. Support is at 1,775 with further risk down to 1,750 on a close below this level. A rebound past 1,790 and more importantly 1,800 would be bullish.

The Nasdaq zoomed 28 points, or 0.7%, to finish at 4,029. Tech kissed a high of 4,043 and we wanted to see a finish above 4,050. The close back above 4,025 was slightly bullish with support at 4,000 still holding. A break below this level will likely get 3,950-3,900 in play.

The Russell 2000 jumped 13 points, or 1.2%, to end at 1,119.85. The small-caps cleared 1,110 on the open and we wanted to see the bulls hurdle 1,120 by the close. The index touched a high of 1,120.17 and fell just short of clearing our resistance target at 1,125. A close above this level would get 1,135-1,150 back in play as long as 1,110-1,100 holds as support.

The S&P 500 Volatility Index ($VIX, 16.03, up 0.27) stayed above 15 despite the strong pop at the open and we flashed warning signs to remain somewhat cautious. The VIX should have broken below 15 on yesterday's action which is telling us volatility remains elevated after the index settled near its high (16.08).

The 20-day MA for the Dow is at 15,956; the 20-day MA is at 1,794 for the S&P 500. The Nasdaq's 20-day MA is at 4,012 while the 20-day MA for the Russell 2000 is at 1,120 and the 2 main indexes we will be watching into today's FOMC meeting.