Typically, stock indices move in unison & volatility indices move in their opposite direction, Trevor Smith reminds readers.
Last week’s “Russel 2000 Diverges” headline preceded it making early lows with the Dow Jones Industrial Average, Dow Transports/Dow Dogs, and financial sectors, taking out the prior week’s midcaps-group extreme. While Nasdaq and the S&P 500 made higher highs, while the CBOE Volatility Index (VIX) printed successive higher highs in oppositional defiance. This fourth week of divergences features the VIX as leader. VIX futures, now even stronger, hold steady over the 20-week moving average but may pullback for a Friday S&P rally attempt off its 20-day moving average.
Invesco’s Dow Jones Industrial Average Dividend ETF (DJD), which seeks to track the “Dogs of the Dow”, has a recent history of volume surges near market swing turns; it accompanied this week’s rebellious-and-leading bear group into divergent early-week lows; it then made a bizarre bull-kicker gap-up candlestick high, exceeding all four into Thursday’s new Q3 high. It may be a rotational sign of weakness (buying dividend stocks during extreme market highs) or a sign of bullishness that institutional traders are creative/adaptive and will find interesting shares, if forced to buy swing highs.
Eight of 10 ranges printed as of Thursday afternoon with other ranges extremely close.
Next Week’s Predicted Ranges (Thursday Night)
E-mini S&P 500
High Range 3504-3482; Low Range 3422-3402
Bearish ranges: Bear engulf candlestick pattern on daily and weekly chart. Buy monthly put spread at strike prices below current levels if bearish.
Japanese Yen
High Range 9475-9455; Low Range 9394-9371
Bullish ranges due daily chart hammer low candlestick on moving average. Buy call spreads as a trade idea.
Euro FX
High Range 1.193-1.190; Low Range 1.183-1.178
Neutral ranges; bullish daily-chart candlestick on moving average. Idea: sell put spread. Weekly chart inverted hammer candle bearish into October.
Gold
High Range $1,981-$1,960; Low Range $1,919-1,902
Neutral ranges; bearish Monthly chart
Crude Oil
High Range $42.25-$41.80; Low Range $40.67-$37.88
Neutral-bullish range due to red hammer candlestick low on daily chart moving averages. Q3-4 bullish targets at $51 for Fall
Last Week’s Predicted Ranges (Thursday Night)
E-mini S&P 500
High Range 3536-3515; High Range 3448-3428
Bearish high range; Buy monthly put spread at strike prices underneath current levels, if bearish
Actual: 3587-3424
Japanese Yen
High Range 9439-9384; Low Range 9360-9342
Bearish ranges due daily chart candlestick & volume. Prior-week .9315 3-Day chart tgt also possible
Actual: 9507-9351
Euro FX
High Range 1.189-1.184; Low Range 1.178-1.176
Bearish weekly ranges; Weekly chart inverted hammer candle bearish into Oct.
Actual: 1.201-1.179
Gold
High Range $1987-$1963; Low Range $1916-1898
Bullish Daily chart bearish Monthly chart
Actual: $2001-1927
Crude Oil
High Range $43.79-43.19; Low Range $42.30-41.60
Bearish range based on unfulfilled candlesticks, resistances. Consider buying put spread due to low volatility Q3-4 bullish targets at $51 for fall.
Actual: $43.57-40.22
Note: Nothing herein shall be construed to be specific financial advice. While reflecting my best good-faith efforts to forecast markets, no guarantees of accuracy are made from my range statistics, aggregate statistics, frequentist interpretations, and pivot math from hand calculations. I am a registered newsletter CTA, and all required disclaimers apply. Trade at your own risk with money you could discard/not miss.
Trevor Smith is a technical market analyst/forecaster who is registered as a Commodity Trading Advisor. Trevor holds four academic degrees across several disciplines and has published works in: Nashville Lifestyles Magazine, The Colorado Daily, The Tennessean/USA Today, Vitamin Retailer, and other media. You can view “Trevor’s Trading” here.
