Topsy-turvy trading activity continues as volatility shakes up the recent highs established in November and December.
The S&P 500 sits at major support near 2050; as seen in the chart below, that level has held declines in March, April and July, with next support levels at 2020 and 2000.
Martin Pring's "Known Sure Thing," or KST, clearly supported the recent rallies but has now settle back near the bull-bear dividing line near 0.
VIX has seen a recent jump (above its 50-day moving average) but remains at a modestly elevated level, not an extreme high that would precede a resumption of a firm uptrend (we have written often here at Baseline Analytics that extreme readings in VIX versus its 50-day moving average tend to precede trend shifts).
But it is interesting to note that the Put/Call ratio is displaying an extreme with its close at 1.25. Note the green line in the $CPC portion of the chart: although less reliable that the VIX indicator, the Put/Call reading speaks of a potential move up in stocks.
Finally, stochastics (which come in handy during trading range markets like this) are moving toward oversold levels but have not quite yet arrived at that point.
The market is nervous and volatility as seen in rallies and sell-offs is the character of the day. As David Fabian has written recently (see our Asset Allocation blog), it may be better to sit on our hands during December.