Watching the VIX…

The S&P 500 Volatility Index ($VIX) surged to an midday high of 22.71. Prior and upper resistance at 22-22.50 was breached but held. Continued closes above the latter could lead to a retest towards 24.50-25 with the monthly peak at 24.81.

Rising support at 21.50 followed by 20.50-20.

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TLT at All-Time High

The iShares 20+ Year Treasury Bond ETF (TLT) resumed its parabolic run after zooming to $145.73 and another fresh all-time high. Blue-sky and lower resistance at $145-$145.50 was cleared and held. Continued closes above the latter could lead to upside potential towards $147-$147.50.

Rising and near-term support is at $145-$144.50. A close below $144 could lead to a quick backtest towards $142.50-$142.

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Sector Update (XLI)

The Industrials Select Sector Spider (XLI) fell for the 4th-straight session despite tapping an intraday low of $73.08. Mid-May and upper support at $73.50-$73 was triggered but held. A close below the latter and the 200-day moving average reopens risk towards $72-$71.50 with the beginning of June low at $71.91.

Lowered resistance is at $74-$74.50. Continued closes above $75 and prior resistance from early June would be a more bullish signal for a rebound towards $75.50-$76.25 and the 50-day moving average that still remains in a slight uptrend.

RSI was able to hold major and late May support at 30. A close below this level would signal additional weakness towards 25-20 with the latter representing the late October and December 2018 low. Resistance is at 35-40.

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S&P 400 Mid Cap Index ($MID) in a Trading Range

The S&P 400 Mid Cap Index ($MID) has been in a 6-session trading range with Monday’s high reaching 1,908. Near-term and lower resistance at 1,900-1,925 was cleared and held with a close above the latter and the 50-day moving average being a more bullish signal for higher highs.

Near-term support is at 1,875-1,850 and the 200-day moving average. A close below the 1,850 level would be a bearish development with risk towards 1,825-1,800 and late May lows.

RSI has been flatlining with resistance at 55. A move above this level would signal additional strength with upside potential towards 60-65 and the latter representing the April high. Support is at 50-45 with a move below the latter signaling additional weakness.

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Russell 3000 Index ($RUA) Update 5/18/19

The Russell 3000 Index ($RUA) had its 3-session winning streak snapped following the pullback to 1,682 into the closing bell. Upper support at 1,680-1,665 held on the close back below the 50-day moving average. A move below the latter opens up risk towards 1,650-1,635 and the 200-day moving average.

Resistance is at 1,690-1,705 with last week’s peak reaching 1,704. Continued closes above the 1,700 level keeps upside potential towards 1,710-1,725 in play.

RSI is in a slight downtrend with support at 45-40. A move below the latter reopens risk towards 35-30 with the latter representing the monthly bottom. Resistance is at 50 with a move back above this level signaling a return of strength and a possible run towards 55-60.

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NextOptions.com Index Market Update for 5/20/2019

Bears Snatch Weekly Win From Bulls

8:00am (EST)

The market showed some strength shortly after a lower open on Friday following news the trade front with the EU, Mexico and Canada is easing with the U.S. set to remove steel and aluminum tariffs on Canada and Mexico. However, weakness returned late in the session following reports of stalling trade negotiations with China with the major indexes making lower lows into the close.

The end result was a down for week for the market with volatility once again spiking towards key resistance levels. The technical outlook for the major indexes remain bullish but the upcoming week will be an important test if there is a return of weakness.

The Russell 2000 dropped 1.4% after tapping a low of 1,524 ahead of the closing bell. Near-term and upper support at 1,535-1,520 was breached but held with a close below the latter and last week’s low signaling additional weakness towards the 1,500 level.

The Nasdaq fell 1% following the late day pullback to 7,810 and close back below the 50-day moving average. Upper support at 7,800-7,750 held with risk towards 7,700-7,650 on a move below the latter.

The S&P 500 was lower by 0.6% after trading to an opening low of 2,854 while also closing back below its 50-day moving average. Crucial support at 2,850 held with a move below this level getting 2,825-2,800 back in play.

The Dow gave back 0.4% after trading to an intraday low of 25,657. Current and upper support at 25,650-25,400 was breached but held with a close below the latter and the 200-day moving average being a bearish development.

For the week, the Russell 2000 tanked 2.5% and the Nasdaq sank 1.3%. The S&P 500 declined 0.8% while the Dow was down 0.7%.

Utilities were the only sector that showed strength after rising 0.5%. Industrials and Energy paced sector laggards after sliding 1.1% and 1%, respectively. Consumer Discretionary and Technology fell 0.8%

The best performing sectors for the week included Real Estate (1.5%), Utilities (1.4%), Energy (1.5%) and Consumer Staples (0.8%). Financials (-2.2%) were the worst performing sector followed by Industrials (-1.9%) and Consumer Discretionary (-1.2%).