TLDR;
This YouTube video provides a technical analysis of the S&P 500 and VIX, focusing on potential market movements around the FOMC announcement. The analyst discusses key support and resistance levels, moving averages, and various technical indicators to predict short-term and medium-term trends. The strategy involves hedging positions and preparing for potential reversals based on FOMC-driven volatility.
- Expecting move to just below 6,800 or could spike through this whole zone.
- Target area 6550 on S&P.
- VIX cycle low coming up, a minor low on the 23rd.
Intro and Market Overview [0:00]
The analyst starts by noting that the market has followed through with an expected move, leading them to shift towards a short-term bearish outlook. While a move up to just below 6,800 is still possible, the analyst is now positioning for a move downwards, with a target area of 6550 on the S&P 500. Existing call positions are now acting as hedges.
Key Technical Levels and Indicators [1:17]
The analyst highlights two important levels: the weekly 20 SMA at 6838, which is expected to be reached after a spike lower (referred to as the "kiss of death"), and the monthly 8 EMA, a momentum indicator that previously held price. The analyst expects the price to regain the 8 EMA after a fall. The analysis is intraday, around 1:30 p.m. Eastern Standard Time.
Trend Analysis and Moving Averages [3:28]
The overall trend is down. The NDX is pausing at the 20 simple moving average, which is acting as a point of rejection. The analyst anticipates potential volatility around the FOMC announcement and expects a possible reversal off the 20 SMA if the market spikes. A higher market going into FOMC is considered more bearish, potentially leading to a significant fall in the following days.
Oscillators and Divergences [4:49]
The oscillator is coming back from an extreme bounce, suggesting a higher low might form, temporarily marking a bottom for a rally. The RSI is bouncing out of oversold territory, allowing room for a move lower. The analyst is looking for a potential positive divergence if price falls but the RSI makes a higher low. Stochastic is starting to curl up, with potential for further cycling higher or deeper into the boundary area.
VIX Analysis and Cycle Lows [7:20]
The VIX has hit the initial target and is back-testing the breakout area, currently at support. The analyst expects it to go slightly lower to the 20 trend indicator but not much further. The trend for VIX is up, and holding this level could be bearish for the broader market. A VIX cycle low is expected around the 23rd, and the market's reaction to FOMC will provide more clarity on this low.
SPY Analysis on the 65-Minute Chart [10:50]
The analysis focuses on the latest leg of a corrective move, with SPY retracing to the 50% level. A breakdown from here is possible. The analyst is viewing this as an ABC leg down, with potential targets around 652 and extensions to 623.6. Extensions off of wave three from wave four indicate a confluence around 644.
Trend Indicators and Moving Averages on SPY [14:10]
The trend is starting to turn slightly, but the move remains choppy. The market is currently fighting with the 50 moving average and is in a neutral stance, pinched between moving averages. An overbought condition on the bounce is causing a retreat, with potential consolidation before a move to 675ish.
Momentum and Potential Setups on SPY [15:22]
Stochastic is a headwind on this bounce, currently consolidating. The analyst will watch for a rollover in the MACD. Money is flowing in, with a previous positive divergence. The top of the Bollinger Band was tagged with an overbought situation, signaling a sell. The Elliot Oscillator is back to a neutral spot, with potential for a whipsaw pattern or continued move lower.
Short-Term Patterns and Potential Targets [16:51]
The current pattern could be viewed as a bear flag. On a shorter-term 15-minute chart, an inverse head and shoulders pattern is forming, suggesting a potential move higher to the 678 area. This move could be part of an expanding ending diagonal, with a fifth wave extension potentially reaching the 786 level. If the market moves higher, testing the downtrend line around 675 is possible, but negative divergence could lead to a failure. The analyst advises protecting gains and portfolios, especially around the volatile FOMC announcement.
