The markets have arrived to the crucial point for the short term direction. If the markets manage to close above today’s close at least for three consecutive sessions we could be poised for a breakout to the above. If the today’s levels don’t hold up the route to S&P 500 1000 mark is open.
Chart 1. S&P 500
Source: StockCharts.com
Wednesdays data from China (CPI, PPI, retail sales) could be the catalyst. To be noted, the volume is light and declining and the volatility is low (both historical and especially implied), maybe a contrarian signs for a positive move.
Chart 2. VIX
Source: StockCharts.com
On the other hand, looking at the VIX cyclical lows, the falling volatility has recently been a clear sign of a market short-term top.
I will wait and see for a couple of days, and then chose a direction.
