Target 200

In an almost uninterrupted advance from the December 26 low at 2346.58, the S&P 500 Index closed last week well above the 200-day Moving Average after four recent attempts. However, looking back to October, the last three time it closed above resistance at the 200 all quickly reversed to close back under the average. Perhaps it's different this time since the operative downtrend was exceeded while the prior three attempts were under the influence of the downtrend. The market review below has more including a breadth update as well as the important 10-2 Treasury Note spread.

S&P 500 Index (SPX) 2775.60 ended the week 67.72 points or +2.50% higher after a 29.87 point advance Friday to close well above the 200-day Moving Average that had been resistance for the last two weeks. It now seems likely resistance at "Target 200" could become support on any pullback. Should the current uptrend continue, it will take a close back above the October 3 high at 2939.80 for the longer term uptrend from the February 2016 low at 1810.60 to resume.

CBOE Volatility Index® (VIX) 14.91 declined .81points or -5.15% last week. 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, declined 1.07 points or -8.24% ending at 11.92, well below the bottom of the recent range around 14 that began last October as the S&P 500 Index turned lower shown in the one-year volatility chart and the SPX line chart. The IVXM began trending lower last April as the S&P 500 Index began trending higher before ending in October. The 52-week high was 31.25 on December 24, while the 52-week low was 7.86 when the S&P 500 Index continued trending higher.

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VIX Futures Premium

The chart below shows as our calculation of Larry McMillan’s day-weighted average between the first and second-month futures contracts.

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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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