Yo Pit Crazies,

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So Israel is going to wait on the Gaza Invasion and the Republicans got a new Speaker. I would have expected the market would cheer that. Well it did not with SPX finishing near lows of the day.

20 day SPX Chart with 1 day candles

That is not a great sign for stocks. I was pretty sure Microsoft Corp (Ticker: MSFT) would lift the market like 6 months ago but it did not happen.

VIX thought differently

Sometime, VIX is a great early tell for market direction

One of the annoying features of this selloff is the lack of capitulation. That is a fancy word for FINTWIT people to describe a sharp selloff with a convenient spike in VIX. SPX is down 180 points in 7 trading days or very orderly 25 points a day. The continued pile on of bad news did not help.

Middle East, No Speaker, Interest rate gone wild are the 1, 2, 3 punch that pushed VIX up as SPX drifted low. VIX has not been able to hold a spike above 20.

20 day VIX chart

This is a key week. If earnings can overcome interest rate worries, stocks should rally. If the new Speaker can put forth some common spending curbs, stocks could rally more. We do need to see something turn the 25 point down day supertanker around.

If anything, I am leaning on the downdraft in VIX as a sign the ship is starting to turn. SPX should head up to the end of the week as long as the earnings are solid.

OP Mentoring is a great way to learn how to navigate markets. Sign up this week, and look for a nice surprise this weekend.

To Your Trading Success,

AG