Rubber Meet Road

SPX closed Thursday at 1955 near OPEX max pain. Now SPX is testing 1960ish where I projected it to stall just above key moving averages, the Fib 62% retracement level and price-volume s/r. So, it's decision time for the market. The rubber meets the road next week.

If A=1991-->1904 and B=1904-->1964, then C=A at 1877, C=A*1.236=1964-->1857 and C=A*1.382 at 1844. Essentially, that matches the very strong price-volume centered on the 1850s just below the 200dSMA and a key uptrend line that I project will get pierced.

As I wrote this, the market tumbled on possible escalation in the Ukraine conflict. An 18pt correction thus far (1964-->1946) is larger than the initial correction (1944-->1928) and nearly overlapping. It's The uptrend is also not very impulsive looking. But I know these news items can flip both ways quickly and today is OPEX with SPX already back near the flatline. So, I'll reserve judgment until 1964 or 1944 are decisively broken. I'd say such a down move is more possbible by end of day than such an up move because traders will position for the weekend of exposure to the latest world news and recent SOS (Selling on Strength) days suggest no large rallies until Tuesday+.

For now, the trading plan is still in effect. I did look back at the last year of VIX readings and found a condition that happened about 10 times and suggests price and volatility will retest (and probably break) the previous 1904 low. VIX 17.5-21.5 appears to be the resistance zone. Good fortune.

P.S. At the close...sizable BOW day and a few overbought indicators relieved. That counteracts the Wednesday SOS day and should prevent SPX from going below the 1920s s/r level for a few days as well as support a possible rally next week. Amazing that max option pain was basically pegged at the Thursday and Friday closes. I think the door is open to a move in either direction although I still favor the downside. It's looking like the Fed Minutes and Yellen's speech next week could be setting up as the catalysts. I messed up recently when I said Yellen's Jackson Hole speech was Friday August 29th. It is actually this coming Friday. The title of this post is appropriate for next week...rubber meet road. Good weekend!