S&P500 (SPX) Technical Analysis And VIX Indices – 7/16/2022

It was a very volatile week this week with CPI data report on Wednesday, JPMorgan Chase earnings report on Thursday, then Retail Sales report on Friday.

VIX Indicators

Despite the volatile market after the CPI data report on Wednesday (7/13), the Pentile Rank (PR) of VIX in relation to VVIX, VIX9D, VIX3M, and VIX6M have all started to decline.

This may indicate the current uptrend will continue. I know it may not feel like the market is in an uptrend with such a volatile market, but SPX Technical Analysis shows the uptrend line is still intact (more details in the SPX Technical Analysis section).

SPX Technical Analysis

In the last week’s Technical Analysis, I expressed a personal bias of the market likely to go higher a little more. This bias was based on the fact that the market broke the shorter-term downtrend line and crossed the 25 days Moving Average (purple line).

Obviously, this week the market not only moved below the 25-day Moving Average but also broke below the short-term uptrend.

However, Friday’s market (7/15) recovered substantially to bring us back within the short-term uptrend line with a gap up.

Housing-related data and Purchasing Managers’ Index will be the main economic data focus for next week.

It will be interesting to see if the market will do both

Break the 25-day Moving Average
Maintain the current uptrend line

My personal bias is there will be a pullback to fill the gap formed on Friday, then continue the uptrend trajectory. Obviously can’t tell when the gap fill will happen, but likely sooner than later considering how volatile the market is.

FOMC meeting is coming up at the end of July so this short-term uptrend might continue until then with wild swings.

In a longer-term view though, we are still in the bear market until there are clear indications that the overall market trend is changing.

The market will approach the longer-term downtrend line (green line) sometime in August, assuming this sideways move continues.

If the market resolves to the upside, then we might see a major trend change. Until then, my plan is to hedge pretty heavily to counter any downward moves.

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Tony

I have been trading options since 2010 and have been testing and experimenting with various trading styles. Fundamental Analysis based, Technical Analysis based, Trend Following, Day Trading, Swing Trading, etc.

My primary option trading strategies incorporate volatility and I am constantly experimenting with various trading strategies to improve my PNL.

I hold two Master’s degrees (MSc and MBA) with career experience as a cancer research scientist and a digital marketer.