S&P 500: Inside Day, Low Historical Volatility Break

The S&P (^GSPC) traded within Thursday’s trading range holding hourly support and performed another high level consolidation. (see 60 min chart below). The index caught a huge bid in the overnight Globex session + 9 points before the open.

Daily Trading Signals

The following signals were generated for 3 Aug:

An Inside Day occurs when entire daily price range falls within the price range of the previous day.  Inside Days are trading sessions that mark signal indecision because neither the bulls nor the bears are able to send the price beyond the range of the previous day. If an Inside Day is found at the end of a prolonged downtrend and is located near a level of support, it can be used to signal a bullish shift in trend. Conversely, an inside day found near the end of a prolonged uptrend may suggest that the rally is getting exhausted and is likely to reverse. Breaking above the High or Low of the signal day establishes a range breakout for the day’s trading. Very useful indicator in combination with Narrow Range Trading Day signals.

The Low Historical Volatility Break signal indicates that exceeding the previous day’s high or low points to a strong directional move in the direction of the breakout. Historical volatility is a mathematical measurement of how much prices fluctuate over a given time period. Once volatility starts to contract, it will continue to decrease until it reaches a critical level. At this point, volatility will expand and price will propel in a strong directional move. These large sharp moves often lead to multi-day trends.

Today’s daily pivot is 987.84, and the weekly pivot is 984.27. Price action above the daily & weekly pivot is bullish.

The $SPX’s normal trading range is projected to be between 982.32 - 992.65.

The $SPX’s extended trading range is projected to be between 978.37 - 996.59.

Specific price levels and projections are discussed on the charts below.

Short term 15 Min & 60 Min

60 min symmetry support is between 981.68 - 983.21. The Hourly charts break down with a 60 min close < 983.

Daily

The 15 Jul daily close above 932, turned the indexes bullish and projected eventual targets of 979 and 1010. Many rallies typically pause or end at the 1.272 Fib extension (979.89) - which the $SPX did. A daily close > 101 implies an eventual test of 1033.

Weekly

The recent -9%, -87 point decline was the catalyst for the current rally. The weekly oscillator turned bullish 13 Jul. A daily close < 929 and support slips to 910 on the weekly charts.

1014 would be a minimal 38.2% retracement of the all time highs @ 1576 Oct ‘07 from the 667 March lows. Most other international bourses have already retraced between 38.2% - 50% of their highs.

Weekly prices remain bullish > 909.77. Longer term Fib support is 832 & 792.

Updated 15 min, Hourly, Daily, Weekly charts with additional Fib support and projection levels are posted below.

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