SPX TA 10.16.2022

Wow, CPI Data Wild Ride! – VIX & SPX Review 10/16/2022

CPI data released on Thursday caused a huge swing down then up in the market. Even though the CPI data was higher than expected, the market initially tanked then made a 180-degree turn and ended the day with green (image below).

SPX after CPI 10.16.2022

The 100% Fibonacci Retracement line drawn with the June low has been penetrated multiple times by now. Zooming out with the weekly chart shows the 50% Fibonacci Retracement line is acting as a support when drawn with the March 2020 low (more details below). The quarterly earnings have started to come out so the market will likely be driven by that next week.

VIX Related Indices

VIX9D dropped below VIX after the CPI data was released on Thursday. It was also lower than VIX on Friday likely due to the VIX weekend effects.

It will be interesting to see if this will last next week.

In case you are interested, here is more information about why it’s a good idea to monitor these VIX indices.

The automated VIX table for these calculations is available here.

VIX ratio 10.16.2022

VIX indices 10.16.2022

S&P 500 Technical Analysis

SPX moved pretty much sideways this week in a wild and volatile manner. It is now closer to the secondary downtrend line and the sideway move should stop to either break above the trendline or continue to follow the trendline to go lower.

There continue to have 3 large gaps but will likely not get filled anytime soon except the one located at the 3740 level.

SPX is now way off the primary downtrend line and obviously will not touch it anytime soon well into 2023 unless we see a large rally in November or December.

SPX TA 10.16.2022

Looking at the weekly SPX chart with Fibonacci Retracement lines drawn from the 2020 low caused by Covid19, the 50% Fibonacci Retracement line is acting as a support now.

If penetrated and going lower, SPX could touch the 3250 level next.

SPX weekly 10.16.2022

My Personal Thinking

It was a huge surprise that the CPI data caused the market to end in green at the end of the day. While most of the gains were erased on Friday, it seems the market is saying the CPI data was not as bad as it appears.

One explanation for this would be when looking at the 12-month percentage change, CPI has peaked and will likely continue to go lower from here rather than higher (image below).

The current sideway move will likely stop next week as the market approaches the secondary downtrend line.

Obviously, a logical prediction would be for the market to go lower, but looking at the weekly chart, some kind of relief rally could also be in the play.

Who knows, the market will do what it wants just like what happened on Thursday after the CPI data.

12-month-percentage-chan 10.16.2022

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