More Room to Run?

If the S&P 500 follows previous trading patterns after the VIX has hit 50, further gains could be in store

By Paul Cherney

After the VIX (market volatility index) has hit 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 Wednesday, July 24, would be Aug. 15; a 10.9% gain from the July 24 close would equate to 935 in the S&P 500.

Volatility should continue to plague intraday action.

Either Wednesday's price action was a background positive, or some of the "big money" decided to throw its weight around in a thinly traded market (probably a little of both).

The Nasdaq has thick and well-defined resistance in the 1288-1300 area. The next layer of resistance is 1312-1354. Immediate support is now 1264-1255.

The S&P 500's resistance becomes thick and well-defined (strong) in the 885-896 area. Immediate S&P 500 support is now 868-859.

Cherney is chief market analyst for Standard & Poor's

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