Chopped Into Another Marginal All-Time High

T2108 Status: 53.0%
T2107 Status: 54.1%
VIX Status: 12.4
General (Short-term) Trading Call: Neutral.
Active T2108 periods: Day #144 over 20%, Day #103 above 30%, Day #47 above 40%, Day #2 over 50% (overperiod), Day #13 under 60%, Day #213 under 70%

Reference Charts (click for view of last 6 months from Stockcharts.com):
S&P 500 or (SPY)
SDS (ProShares UltraShort S&P500)
U.S. Dollar Index (volatility index)
EEM (iShares MSCI Emerging Markets)
VIX (volatility index)
VXX (iPath S&P 500 VIX Short-Term Futures ETN)
EWG (iShares MSCI Germany Index Fund)
CAT (Caterpillar).

Commentary
The S&P 500 (SPY) printed another all-time high on Friday, May 15th. The index is up 0.3% from a week ago when I wrote the last T2108 Update noting how those Friday gains represented half of 2015’s entire year-to-date gain. Such is the nature of the chop of the market that goes nowhere yet manages the smallest slivers of miniscule progress.

The S&P 500 just keeps chopping along into one marginal all-time after another

 

The S&P 500 just keeps chopping along into one marginal all-time after another

The S&P 500 is making so such slow progress upward along its 50-day moving average (DMA) that I describe this as a chopping range. The move is not technically a trading range since new highs are being made along the way. All the chop makes it feel like nothing is really happening. The index is also looking like a coiled spring given it is spending a lot more time above its 50DMA than below.

T2108 is chopping even more than the S&P 500. It closed at 53.0% – smack in the middle of a very firm range for 2015. This lag means, technically, the S&P 500 has a lot more upside potential before a notable pullback. My trading call stays in neutral though. Instead of betting on market direction, I am betting on an increase in volatility.

Volatility has held onto its lows despite this chopping range. The VIX is now back to levels that have preceded brief pops higher.

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Full disclosure: long UVXY call options, short EUR/USD, long TLT call ...

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Comments

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Carol W 6 years ago Contributor's comment

I am in awe of your trading skills..cheers, Carol

Corey Gaber 6 years ago Member's comment

Agreed.