SPX Breaks Support on Heavy Volume as VIX Spikes to Highest Level Since October

All nine sectors moved lower on Friday and for the week…as of Friday XLB and XLE are down more than 10% YTD, XLI is down about 8% YTD, XLF, XLK and XLU are down about 4% YTD, XLP is near even and XLV and XLY are up about 5% YTD.

Breadth weakened as decliners led advancers 5.96 to 1 on the NYSE and 2.43 to 1 on the NASDAQ.

Friday – weakened, decliners led

Thursday – weakened, decliners led

Wednesday – weakened, decliners led

Tuesday – weakened, decliners led

Monday – weakened, advancers led

SPY down 6.34 at 197.63 on 346.5 million shares, above average volume

VIX up 8.89 at 28.03…

TNX down .30 at 20.54…

TLT up .38 at 126.40…

XLF down .88 at 23.64…

AAPL down 6.89 at 105.76 on 128.2 million shares, above average volume

FB down 4.50 at 86.06 on 62.7 million shares, above average volume

Technical Commentary:

IWM -1.17%, DIA -3.09%, SPY -3.11%, QQQ -4.37%.

SPY formed a bearish harami on Tuesday, moved below Tuesday’s low on Wednesday, broke last week’s short-term support on Thursday and broke below July and March’s intermediate term support on Friday.  With the SPY -2.95% YTD as of Friday did hold above January’s support levels.

If you turned defensive on Wednesday and bearish on Thursday you are spot on and should have been able to protect profits and even profit to the downside.

SPY volume of 346.5 million shares was the second highest daily volume of the last year.  Only October 15 of 364.1 million shares was higher.  October 15 was the low day of last October’s correction.

As we observe regularly as the SPX broke support the VIX spiked to its highest level since last October and its highest close since 2011.  With the SPX closing near its low of the day, the VIX inversely closed near its high.

The chart evidence does not indicate that this is the beginning of a bear market with Friday’s close still 150 points above last October’s low.  It does however reinforce why it is so important to monitor positions daily, adjust stops, become defensive and bearish as markets roll over and break support.

Wait for institutional buying to establish support and begin buying before taking new short-term positions.

Trade with the trend of the chart you are trading and continue to move your profit protection stops.  Continue to follow your rules.

Short-term Chart Targets:

SPY =...200.00

QQQ = 104.00…

IWM = 116.66, 117.50…

Support Levels

SPY = 196.03, 194.95...

QQQ = 100.49, 99.29…

IWM = 114.76, 111.79...

The SPX Market Forecast is turned down at 33.

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Setups

Horizontal Breakout: GLD

Bull Flag: P, RCL, RPD, W,

Potential Bullish Divergence: CRM

At Support: CCL, CSIQ, DAL, ETSY, GME, JCP, NCLH, PYPL, SHAK, SLCA, SUM, TPX, X, AAL, ADBE, MNST, MSFT, NFLX

Moves

New Highs: TLT

Bounce: CRM, UBNT, YOKU, JD, STX,

Gap Up: VXX,

Gap Down: SPY, QQQ, IWM, AMBA, C, CYBR, ETFC, FAS, FIT, MS, SCHW, SONC, STI, SWKS, UA, EA, ESRX, FB, GILD, ROST, SBUX, SWKS

Support Break: AIG, AXTA, BAC, EXPE, GPRO, HOG, LVS, MBLY, NKE, NTES, SCTY, SHOP, SUNE, SVXY, V, AAPL, ADSK, AMZN, AVGO, BIDU, CELG, GOOGL, INTC, TSLA, YHOO

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Watch List Stocks

Leading stocks > +2% on Friday: VXX, YOKU, IMGN, UBNT

                                                       

Lagging stocks < -2.0% included: SCTY, SUNE, RPD, FAS, SEDG, AMBA, UA, FIT, SUM, SHAK, JBLU, ETSY, FSLR, MS, MBLY, SHOP, NKE, PYPL, NTES, DAL, GPRO, SCHW, STI, HOG, V, BAC, EXPE, SPLK, ETFC, AIG, C, CCL, BABA,

2 of 100 NDX stocks closed higher on Friday

Leading NDX 100 stocks included: JD, CERN, ADBE, BIDU, STX, CSCO, WDC, TRIP

Lagging NDX stocks included: INTU, VIP, ROST, NFLX, GILD, AAPL, MSFT, VRTX, SBUX, AAL, GOOGL

NDX Stocks to Watch on Monday

Moving Above 30 DMA = 0

Moving Below 30 DMA = 14

AAL, ADBE, ADP, ADSK, AMZN, CHRW, CTSH, DLTR, FISV, GOOG, LVNTA, ORLY, PCLN, ROST

6-month Intermediate Term Market Trend: Down

3-day Short Term Market Trend: Down