Simpler Sentiment – Weekly Wrap-Up 01-13-17

Our traders were expecting a sideways week, and that is exactly what we are ultimately ending up with, as we head into the afternoon just a few points below last week’s close and this week’s open. The S&P 500 sits at 2272, up less than 2 points on the day. The Nasdaq 100 is up to more new record highs. The DOW remains just below that 20,000 mark.

The VIX is down fractionally to 11.49. The VXST, the 9-day Volatility Index is all the way down at 9.13. That is the lowest level since July of 2014. We also have the lowest 5-day closing average for the VIX since July of 2014, and before that time period, we go back to February 2007.

Our traders were neutral at the start of the week, and that doesn’t change much going into next week.

John: While stocks remain volatile and choppy on an intraday basis, from a daily perspective, we are consolidating at the recent highs, which is bullish.

Chris: I think we test 2250 again on Tuesday or Wednesday.

Carolyn: Since I’ve raised the caution flag in this market due to time cycles and the fact that we are at extensions where moves tend to terminate I have to stick with “neutral” at this point.

Tucker: The markets continue to be choppy and have a lack of direction.  The Dow has struggled to break 20,000 for three weeks, and the S&P 500 has struggled to break new highs.  I expect the same next week into the inauguration.  The financials seem to be one of the stronger sectors.  Banks are just starting to announce earning.  Those results will help determine if they continue to rally or not.

Doc: The market is struggling with the psychological 20,000 level in the DOW but the trend is still higher. This point will be breached within the next week or two and if probabilities hold it could use this as a platform for a significant advance. The uptrend is too solid at this point to risk shorts.

David: While short-term patterns remain inconclusive, everything continues to suggest that the bullish advance from the February, 2016 low has materially further to go.   It could continue straight up from here, that’s why it is dangerous to oppose trends, but because of the short-term uncertainty, we could see a move back to the area of the December 30th low before continuing up.  That uncertainty is what continues to make it easier to trade the index on a long-term basis right now to smooth out the short-term chop.

Chris McKhann

Chris McKhann

Chris McKhann has been involved professionally with the stock market for more than 15 years and specifically with derivatives for 12 of those. He started as a stock broker, but quickly moved on to options and futures trading. He spent some time as the Derivatives Product Manager for TD Ameritrade. He was the chief analyst and hedging strategist for OptionMonster. He has been an options trading educator and content provider for many years. His writing and analysis has been featured on Reuters, the Wall Street Journal, Forbes, TheStreet, CNBC and internationally. He has also designed and traded option and futures strategies for prop trading firms and hedge funds as well as managed accounts.

Leave a Comment