Charting the S&P 500: Giving Bulls the Benefit of the Doubt

It is hard to see much of a trend in place when volatility is scarce. We have seen the volatility index (VIX) not moving up much, which tells us the S&P 500 is not oscillating.

What does that mean exactly?

When volatility is on the move and the VIX is jumpy, there are wide dispersions of price. What might normally be a 1% expected move might be higher than that. As information, a VIX at 16 implies a 1% move, while a VIX at 24 implies about a 1.5% move, all of that about two-thirds of the time. We are not getting anywhere near those moves, but last week the large moves down did start to rattle investors.

There’s a lower high and lower low now on the chart but we will continue to give the bulls the benefit of the doubt. The candles are blue, which is bullish on the GoNoGo composite of indicators. MACD remains on a buy signal and momentum is starting to kick in. Money flow dipped but remains positive.

Some interesting events coming up this week. On Wednesday we have Nvidia (NVDA) earnings after the close, which is always a big market moving event.

Friday starts the Jackson Hole Conference, and Fed Chair Kevin Warsh will be the keynote speaker. We don’t know much about where he will go with his speech but it could certainly wreak havoc on stock and bond markets. We are nearing the end of August, which is trying to finish in the green.

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At the time of publication, TheStreet Pro Portfolio was long NVDA.