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Watch the VIX

By Paul Cherney The Nasdaq has immediate resistance at 1235-1263. More substantial resistance is 1287-1300.

Immediate S&P 500 resistance is 853-875.28.

The S&P 500 has substantial resistance at 884-910, with a focus at 888-896. Immediate support for the S&P 500 looks strong in the 853-835 area, but Monday's session had a close just underneath that level (834.60). An important price point for the S&P 500 is the 826 level.

I know this might seem absurd to mention this, but the VIX is knocking on the door of 50 again. An intraday move above this level with a close below 50, can be followed by a sharp rebound in prices (or it can happen intraday as was the case on Wednesday, July 24).

The envelope of normal price activity for the S&P 500 in the aftermath of the July 24 VIX reading over 50 has not been broken. (The VIX usually doesn't rise above 50 unless people are getting scared and selling, which can create rebound bargains). My comments from Friday's column are still valid, if you took the list of the worst closing percentage changes in the table printed here in the July 29 column and calculated an equivalent close for the current S&P 500, here is the list: 818, 826, 826, 802, 818, 833. The price action is volatile, but it is not unnatural in the aftermath of a VIX reading over 50. 1998 saw several readings over 50 in the August through October timeframe.

These studies were based on price action in the S&P 500, not the Nasdaq composite.

The S&P 500 has a layer of old support which runs 817-716, it gets thick at 736-716. Cherney is chief market analyst for Standard & Poor's

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