Stocks were all over the place last week.
The S&P 500 started off Monday morning at 2583. By Wednesday, the index was down to 2557. It rocketed as high as 2590 on Thursday. Then, it reversed lower on Friday. By the time the closing bell rang for the week, the S&P 500 finished at 2579 – basically right where it started.
Lots of action… but no real movement.
In the midst of it all, the Volatility Index (VIX) triggered its seventh buy signal of the year. Take a look…
VIX buy signals occur when the index closes above its upper Bollinger Band – which normally coincides with an excessive spike in investor fear – and then reverses and closes back inside the bands. This signal usually marks the end of a decline phase and the start of (at least) a short-term rally phase for the broad stock market.
Here’s how the S&P 500 behaved following each VIX buy signal this year…
In all six previous buy signals, the S&P 500 rallied immediately – usually hitting new all-time highs shortly afterwards. In August, the S&P rallied off the buy signal but then turned lower and made a slightly lower low before kicking off an intermediate-term rally. That was also the strongest rally phase of the year.
So, what can we expect from this new VIX buy signal?
Well… as hard as it is for a market doubter like me to admit, it’s tough to be bearish right here. The back half of November is typically a bullish time for the market anyway. Now with the new VIX buy signal, the bulls have even more momentum.
And, with the S&P 500 already so near its all-time closing high, there’s a good chance the stock market will make a new high – and maybe surpass the 2600 level – by the end of the week.
Best regards and good trading,
Jeff Clark
P.S. Whether the market goes up, down, or nowhere… my “secret key” technique finds short-term, high-upside setups for my Delta Report subscribers.
To learn more about my technique and how I discovered it, click here.
Reader Mailbag
Today, some kind words from Delta Report subscribers…
Jeff, please continue what you’re doing. I like that you explain your decisions.
– Zeny R.
Hello Jeff and staff. Just a quick note to say I really love the work here and it fits my style of short term trades and… well, lots of other things you do here.
I find myself skipping some trades because they might be in sectors that I’m not familiar with or just don’t have a personal leaning towards. But as many as I feel some connection to, or a good reason to jump in, those I do. But also, like you say, some are a bit too big (selling a Put on a stock above $50 per share) and I may not want to get put that stock at that price. Usually if the price is $30-something or less, those I do.
Well anyway – just wanted to say thank you for the work and I hope to be back again as soon as able. Thank you again and God bless!
– Chris M.
As always, you can send in your thoughts… and any other questions or suggestions… right here.