Stock market bear market. Downward trend charts on the investment platform. Double exposure of the bear and candles on the chart.

Stocks finished the day higher, with the S&P 500 rising 1.5%. The equity market rallied due to a move lower in the VIX and implied volatility. Rates were up, the dollar was up again, and more importantly, the TIP ETF was very close to making a new closing low. These are not bullish signals.

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The VIX finished the day right around 26 and seemed to be positioned perfectly at this point to spike higher. Options deltas in the SPX and the QQQ ETF were negative, suggesting put buying and call selling. The VIX didn’t reflect that, giving markets a false sense heading into a reasonably critical employment report, especially on the wages side.

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Despite the decline in the VIX, the VVIX finished the day flat and continues to be at very low levels. An indication of a form of complacency, in my opinion.

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The S&P 500 is back to the 3,900 level and resistance, where the index failed last week. So, if the index is going to make a run to fill the gap around 4,020, it will need to gap higher tomorrow and go. Otherwise, there is a good chance the S&P 500 will set up a double top and a revisit of the lows.

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So you can see how the market is positioned from a rate, volatility, and index standpoint. Get a hot number, rates and volatility probably move up, and stocks move down. Get a weaker number, rates and volatility probably move down, and stocks go up.

Given the negative deltas in the SPX and QQQ, I think the market is setting up to move lower. Additionally, next week we get the CPI report, which could bring plenty of hedging activity into the mix, another reason for the VIX to hold this 25-26 region and move higher.

ARKK

The ARKK ETF can also hint following the jobs report, as it closed on resistance at 46.85. Again, a gap above that resistance setups a move up to around $53. If not, probably back to the lows.

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We will have to see what happens tomorrow before making any other conclusions.

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