By Paul Cherney After the VIX (market volatility index) hits 50, the average gain for the S&P 500 is 10.9% and the average length of time that it rises after VIX 50 readings is 16 trade days. The 16th trade day from July 24, would be Aug. 15; a 10.9% gain from the July 24 close would equate to 935 in the S&P 500.
In Thursday's session, the VIX crossed back down through its 10-day exponential moving average. Historical odds are 7 in 8 favoring a closing gain for the S&P 500 in Monday's session. If you average all the closes for the second trade day after a signal (all 7 pluses and the 1 negative), the average was +1.24%.
The two studies mentioned above keep a positive bias in place for the S&P 500 in the upcoming week.
This upcoming week is options expiration week and this event can lend its own special degree of volatility to a market which is rife with volatile trade already. I have intraday indicators (based on 60 minute bars of activity combining price and volume) which are currently suggesting only minor gains in Monday's S&P 500 session, and then sideways travel for Tuesday (unless there is an abrupt change in trend during Monday's session, which will move these indicators.)
The Nasdaq's next layer of resistance is 1312-1354. Resistance gets thick with prints of 1335 and higher. Immediate support is now 1298-1263.
The S&P 500 is near the top a layer of resistance which runs 885-911.63. The index has thick resistance 918-934. Immediate support is now 901-890 and 888-875. Cherney is chief market analyst for Standard & Poor's