Sunday, May 15, 2016

More Range Bound Trading Expected

In last weeks post, I expected a 1-2 day rally to start the week with an upside target of SPX 2075/80 that would be followed by a 40-50 pt decline to SPX 2030/35.  Overall not a bad call with a high just below 2085 and a low of about 2043.  We may still see the target low early next week, but high put/call ratios and low SKEW point to higher prices by the end of the week.

Looking at the sentiment indicators, starting with the the intermediate Indicator Scoreboard, levels have risen to the same area as the Mar and Nov 2015 lows, supporting a short term rally.

Looking at the short term Indicator Scoreboard, also supports this view.

The differences between the put/call ratios (CPC Revised) and volatility (VXX $ volume) continue and currently indicate that the rally is likely to be short-lived.  With put/call ratios risk-on,

but with volatility remaining in the risk-off mode.

Conclusion.  I had expected a larger increase in bearish volatility sentiment, but the stubbornly low readings so far have me looking for more of an early Dec 2015 whipsaw than a Nov 2015 type rally.

Weekly trade alert.  My actual trading last week was sub par, since my entry was placed too low (2075) rather than the SPX gap at 2082/3 that I saw Monday and then I got stopped out at 2060 Thurs when I was expecting a wash out and set a stop before leaving to run a couple of errands. To make trading ideas more flexible, I set up a Twitter account with username mrktsignals, where I will post trade updates, etc during the week.  Next week, I will look to short a rally to SPX 2070/80, expecting a sharper decline to the SPX 2000/20 area after options exp week.


  1. Hi Arthur,

    Any possibility of spx crossing 2110 in this rally before we top out??



  2. Hi Arthur,

    Are you still expecting a rally by Opex??