S&P 500 Sets Sights on 4200 as Volatility Eases: What to Expect Next

This seems to be a recurring theme, with Treasury rates moving lower and the VIX moving higher on Friday into the weekend, and that unwinding some on Monday. Given everything happening in the world, it certainly makes sense to see this, making it hard to assess what is happening in the market today.The VIX dropped from 21.3 to 19.7 today. It seems hard to imagine that, given everything going on this week in terms of news flow, implied volatility is going to stay down.

It is possible to count the rally as a retracement and a completed retracement, as it would mark a 50% retracement of the decline from October 24 through October 27; wave C equals 78.6% of wave A. If this is right, then today, the index should drop right from the opening and undercut Friday’s low at some point during the next few days.

If that is the wrong count, the next spot to look for would be 4,200, the 61.8% retracement of the 5-wave impulse down.) fell almost 5% today and moved below $200. If the topping pattern was a diamond, then we should return to the pattern’s origin, which is at $165. So, the pain may not be over just yet. The move from the October 2022 lows appears to be a 3-wave retracement pattern—the move down since the July peak appears to be a 5-wave impulse. So, a drop to $165 seems possible in my view.

The e-commerce and cloud computing giant comfortably beat analyst expectations last week. Diving deeper, the fundamental picture is clearly a lot stronger than investors were...We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: Include punctuation and upper and lower cases.

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