Stocks show some Signs of Life

Stocks showed some signs of life on the last trading of last week (it was Friday the 13th actually). All the broad markets were up with the S&P 500 up +2.39%, the Dow Jones up +1.47% and the NASDAQ up +3.82%. This morning as I write this note, the pre-markets are more or less flat.

As we have seen in the past several weeks, with the volatility levels so high, the markets tend to swing quite a bit within the day. So, what we see in the morning may not be how the market closes for the day.

Speaking of volatility, here is the chart for the VIX (Volatility Index).

We can see that the last 3 months the VIX has been swinging mostly between 20 and 35 which is very high. We had the high on March 7 which was not reached in the current swing upwards. Is that a sign that the volatility is coming down and we are close to a bottom in this down cycle. I do not know. But the VIX is certainly something to watch for.

Looking at the 3-month chart for S&P 500 we can see that the price is still below the 10-day simple moving average.

And the 10-day SMA is still below the 20-day SMA. So, we stay out of the market and wait for those trendlines to reverse. We will get in when the 10-day SMA crosses above the 20-day SMA.

The NASDAQ looks similar:

So, it is not yet time for me to get in the market. The crossing of the 10-day SMA over the 20-day SMA gives me confirmation of a true reversal that has a better probability of turning into a trend.

So, I will wait and watch.