As we have been expecting, sellers came into the stock market today. They took the market down nearly 30 points. Some of the traders I work with have been wondering where the volatility went during the past few weeks. I mentioned in the last post that traders should be alert for an increase in volatility. Here it is.
Tonight’s chart is the cash index for the S&Ps. I use this when we need to go back further than the current contract to look at potential price levels.
On the cash market, we have a support level around 1330. This is labeled ‘A.’ Watch how the market trades around this level. Today got oversold, but it wasn’t climactic. Selling overcame buying, and buyers retreated. Buyers now have to step back in. We can see further downside.
It is possible that a larger pullback could take us down around the 1300 – 1290 level (B). In the March futures contract, this would be closer to 1380, or so. So, there certainly is some potential for more downdraft.
Leave a Reply