More Gains Likely

Historical odds are 50-50 that Friday sees closing gains in the S&P 500. They increase to 7 in 8 for Monday's session

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 Wednesday, July 24, would be August 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 50/50 that tomorrow sees closing gains in the S&P 500. For Monday's market, odds are 7 in 8 that the S&P 500 will gain ground by the close.

Volatility should continue to plague intraday action.

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 and it does not appear likely that prices would be able to crash up through this level unless there is a headline of undeniably bullish importance. Immediate support is now 896-877 with a pretty strong ledge (that should hold if tested) in the 896-885 area.

Cherney is chief market analyst for Standard & Poor's

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