Market Outlook: Investors Rattled By Rising Volatility

The S&P 500 Index had a slight give-back day on Tuesday (-1.22%) following Monday’s impressive rally. Tuesday’s candle formation was an “inside day” and featured another long lower shadow.

Despite the turbulent conditions, we still haven’t officially entered a correction of down 10% on a closing price basis (despite touching that level on an intraday basis).

All four major U.S. stock market indices continue to have strongly bearish intermediate postures, according to the Market Forecast indicator. All four major U.S. stock market indices continue to trade below falling 30 day moving averages.

Volatility remained elevated Tuesday, with the VIX Volatility Index continuing to trade above 30.

The U.S. Dollar is sitting right below its falling 30 day moving average, but does at least have a weakly bullish intermediate posture.

Gold (+0.32%) and Oil (+1.43%) remained robust, with both trading above rising 30 day moving averages and featuring strongly bullish intermediate postures.

The 10 Year U.S. Treasury Yield closed higher and finished at 1.78%; it’s in the midst of possibly forming a head-and-shoulders pattern.

Conversely, Long Term U.S. Treasuries were down 0.16% Tuesday and have a strongly bearish posture; but an inverse head-and-shoulders pattern is a possibility.

Bitcoin was up Tuesday when most growth stocks were down; it is now at an interesting level approaching support from last summer (along with oversold clusters).

Energy remains the lone sector bright spot; not only is it at the top of the Sector Selector, but it’s also the only sector with a bullish intermediate posture. Consumer Staples have a weakly bearish posture; all other sectors are strongly bearish.

Our trade application example featured selling a put on Texas Instruments (TXN) prior to their earnings announcement due to its oversold weekly cluster, along with approaching an attractive entry for a long term dividend investor

Get market insights, stock trading ideas, and educational instruction over at the Market Scholars website.

Stock Market Outlook Video (for January 26) – News and Analysis

Twitter:  @BrandonVanZee and @MarketScholars

The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.

Sign up for our FREE newsletter
and receive our best trading ideas and research