The stock index is holding the line so far.
You can see the percent of S&P 500 stocks trading above their 50 day moving average closed at 30% last week. It’s also testing a low trend, not it is a real trend where buying/selling pressure exists, it’s just a line showing the percent of stocks in short term uptrends are where they were at the May low.
Next, we see the percent of stocks above the longer-term trend closed at 55% last week, the same level as the March and May lows.
CBOE S&P 500 Volatility Index $VIX only dropped -2.77%, which is light, considering the S&P 500 closed up 1.1%.
The options market last Friday showed asymmetry between put buying and call buying with the market favoring puts 144%. Index options seem to be mostly used for hedging.
Individual equity options are more traded for speculation. Put buying was high on individual stocks last Friday, too. You can see the typical range is much lower.
This isn’t advice for anyone as this index cannot be traded directly, but I want to make a point that if I wanted to take a position here to increase explore, I would place my exit just below the red line. The red line is the May and March lows, so if the price trend falls below that, the trend changes from up to down. Lower highs and lower lows is a simple example of a downtrend. I just wanted to point that out as a very simple example of a tactical trade based on the price trend.
We’ll see how it all unfolds from here.
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