Wednesday, July 28, 2010

SPX Range-Bound Chart

Further to yesterday’s Leveraged ETFs, Volatility and Range-Bound Markets as well as my take on The Elusive Trading Range from mid-June, I thought I would share a chart I included in last week’s subscriber newsletter.

The chart below captures daily bars of the SPX going back six months. It includes Fibonacci retracement levels based on the April SPX high of 1219 and the July 1st low of 1010. I have also added secondary support and resistance levels (black dotted lines) at 1065 and 1170 and have shaded the center of the Fibonacci zone (38.2% to 61.8%) in what looks like a salmon color (hey, it’s lunch time.) In addition to the SPX support and resistance lines, the study below the main chart is of the McClellan Summation Index (NYSI), a measure of market breadth, which shows more strength than has been reflected in just the recent price action.

My working hypothesis continues to be that we are in a trading zone that have been and will likely continue to be defined by some of the support and resistance levels on this chart. If this turns out to be the case, even with the VIX at what is now almost a three month low, straddles, strangles, butterflies and condors can still be attractive trades.

For more on related subjects, readers are encouraged to check out:


Disclosure(s): none

blog comments powered by Disqus
DISCLAIMER: "VIX®" is a trademark of Chicago Board Options Exchange, Incorporated. Chicago Board Options Exchange, Incorporated is not affiliated with this website or this website's owner's or operators. CBOE assumes no responsibility for the accuracy or completeness or any other aspect of any content posted on this website by its operator or any third party. All content on this site is provided for informational and entertainment purposes only and is not intended as advice to buy or sell any securities. Stocks are difficult to trade; options are even harder. When it comes to VIX derivatives, don't fall into the trap of thinking that just because you can ride a horse, you can ride an alligator. Please do your own homework and accept full responsibility for any investment decisions you make. No content on this site can be used for commercial purposes without the prior written permission of the author. Copyright © 2007-2023 Bill Luby. All rights reserved.
Web Analytics