S&P 500 Technical Update, New Low To Test 839.80, VIX Needs 750mg Benzodiazepine

Between 900 - 1000 in the S&P has been the range where most of the extremely volatile swings have occurred recently. Today it closed right at the lows of the range, 907. If 900 is breached we touch 839.80, or the capitulation point we saw last week. It could happen again given today's volatility levels. Also the Relative Strength Index tested the July lows under 30 last week. It bounced above 30 recently following the upside in the S&P, however it could retest those lows. Usually when the RSI is under 30 continuously it means we're oversold. Surprisingly the Money Flow Index has not put in a new low since July and could be diverging with the S&P on a 4 month basis. On a monthly basis it looks like the S&P 500 is oversold on a technical standpoint. However since the volatility index increased 25% today to 69.25 and the S&P was down 9%, until things simmer down, technical indicators (longer than 5 minutes) will not be able to guide this market. This market needs a daily 750mg dose of Benzodiazepines to calm it down at this point. Hopefully these liquidity injections by the Fed will do the job, and the VIX will double top from here. We’ll see.

At 1:52am, the Nikkei is down over 10%, and overnight Dow and S&P futures are down 1.6%, and 1.8%.


S&P 500 Index (Source: Stockcharts.com)


VIX Index (Source: Yahoo Finance)