Weekly Market Perspectives – 09/07-09/11

Weekly Market Commentary –
 

With the shortened trading week, this week’s price action could have best been characterized as a period of consolidation, as the major indices closed near where they opened.

All in all a slightly positive end to the week as the buyers were able to close the week slightly higher.

At this point all of the major levels we outlined last week have held hence the following scenario is still in play.

We see 2 possible scenarios –

1.  If the SPY can hold the ~189 level then the expectation is that we see the market work its way higher.

If the SPY clears the 199.88 level then we would be back to the races with the following intermediate upside target –

  • Unfilled gap @ 208.32 and a re-test of the symmetrical triangle.

2.  Else if we fill the gap @ 192.85 and ~189 level fails to hold then we can expect to find ourselves back at the lows of 182.40 with the following downside targets –

  • Unfilled gap @ 177.48
  • Unfilled gap @ 173.22

The VIX remains at elevated levels however numerous downside targets in the form of gaps remain unfilled at 24.71, 20.72, 17.62, and 16.26.  If the VXX breaks down and fills some of the gaps below this would certainly be supportive for a broader market rally.
Only caveat as I mentioned earlier is if the ~189 level on the SPY doesn’t hold, we have a high probability of testing the unfilled gap @ 33.31.
Here’s an updated VIX (the Volatility index) chart below.

Here’s an update on our sector rotation watch.

Notables –

  • Healthcare, Technology, and Con. Discretionary had big weeks but in the bigger picture all the sectors are still consolidating
  • Nearly all the sectors have coiling patterns and it will be worth watching how they break out of consolidation
  • If some of the leading sectors like Healthcare and Technology breakdown, if won’t fare well for the overall market

The major sectors are posted here on Finviz for your viewing pleasure –

http://finviz.com/screener.ashx?v=211&ft=4&t=XLF,XLY,XLK,XLB,XLI,XLE,XLU,XLV,XLP

 

Weekly Market Perspectives – 09/07-09/11

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