Stocks Rise As Volaltity Unwinds, But May Soon Run Out of Steam
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Stocks Rise As Volatility Unwinds, But May Soon Run Out of Steam

11.5.20

Stocks – NVDA, GE, XOM

Macro – SPY, VIX

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I don’t know if anybody noticed, but there was a Fed meeting today, and we will get jobs data tomorrow.  I’m not sure anyone is paying any attention to either at this point and perhaps that is for the best. There was nothing I heard today out of the Fed that seemed to be of much concern to me, and let’s face it; it was for the best. The jobs data could be a variable tomorrow, but how much of a variable, I’m not sure; it will depend on what those results are. 

Stocks continued to climb today, but I believe this has more to do with dealer positioning and the unwind of risk. So I’m doubtful this move higher will continue, and I still think we have gaps lower that need to be filled.

S&P 500 (SPY)

We can see that the S&P 500 rose right to downtrend and essentially stopped and could not rally past it all day. 

Anyway, we can see it a little bit better on this chart. Now is it possible the futures rally overnight and gap up higher again, absolutely. I don’t think it is likely. 

VIX 

The VIX has collapsed back to 26, and that is the key level for the VIX; everytime it gets down to this region, it seems to stop. I’m not sure at this point there is a reason for the VIX to continue to deflate. It is not a coincidence that the VIX stock falling at support, while the S&P 500 stopped rising at resistance. 

Nvidia (NVDA)

Nvidia has jumped on limited volume and has an RSI trending lower. The stock failed at resistance at the upper end of the trading channel.

GE (GE)

GE is getting very close to confirming a reverse head and shoulders pattern. It would need to rise above $8.50 to do that. It could have a long way to run if it breaks out, perhaps back to $10ish.

Exxon (XOM)

Exxon isn’t doing much these days, but the RSI still has a positive slope to it, so perhaps it continues its path higher.

Have a good night

-Mike

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