Buy The Dippers Pounced

After a quick three-day pullback including a gap opening lower last Monday as the S&P 500 briefly exceed the 50-day Moving Average before closing higher, buy the dippers ended the decline on Tuesday by pushing the S&P 500 Index back up above the previous Friday's close. The Market Review explains with more details. 

S&P 500 Index (SPX) 4411.79 advanced 84.63 points or +1.96 % last week making a new closing high Friday as well a new intraday high at 4415.18. After last Monday's gap opening lower ahead of earnings reporting, that really gets going this week, odds were better than 50/50 the decline would be limited as buy the dippers get busy holding the decline to less than 5%. Indeed they did the next day, on-turn around Tuesday, since the 50-Moving Average stopped the previous six pullbacks as this Bespoke chart as of the close last Monday shows.

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Now after making new highs, connecting the March 4 low at 3723.34 to the July 19 low at 4222.13 creates a new operative upward sloping trendline, USTL, that's equal to the 50-day Moving Average at 4256.80.

Invesco QQQ Trust (QQQ368.20 gained 10.60 points or +2.96% last week breaking out to new closing and intraday highs on Friday. With the new high, a new operative upward sloping trendline, USTL starts at the May 18 low of 316.20 and connects with the July 19 low of 352.04 at an ideal 30-degree slope and well above the 50-day Moving Average at 344.72. In the event of an unexpected pullback, both will likely provide support, first the USTL then the 50-day Moving Average. The bulls should be delighted.

CBOE Volatility Index® (VIX) dropped 1.25 points or -6.78% last week ending at 17.20. Our similar IVolatility Implied Volatility Index Mean, IVXM using four at-the-money options for each expiration period along with our proprietary technique that includes the delta and vega of each option, slid 2.00 points or -14.38% to close at 11.91% after spiking up to the range mean at 17% last Monday, as shown on this six-month chart.

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Disclaimer: IVolatility.com is not a registered investment adviser and does not offer personalized advice specific to the needs and risk profiles of its readers.Nothing contained in this letter ...

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