The markets huffed and puffed Thursday before closing near the lows of the day, so I’m being very, very cautious right now. Markets are flat (the Dow and S&P 500) to up slightly (the Nasdaq) as head into the final trading day of the week.
I’m not super bearish, but the market is likely to come down a bit after the big move above all-time highs we’ve experienced.
The key to watch today is to see if we fall below Thursday’s low, the $449-$450 level in the Nasdaq 100 (QQQ).
Volatility is mean-reverting, and it’s super low right now at 12.30, so odds are it’s going to start moving higher again.
The bond (TLT) and stock markets have been following each other, but TLT is already below Thursday’s low, and I believe we may see the same thing in the stock market.
If the bond market moves lower and volatility moves higher, I don’t think that’s going to give stocks much firepower.
So those are the three things to watch today: volatility rising, the QQQ to break the low, and the bond market to test the 200-day moving average or continue moving down to the 50-day.
We don’t have any major catalysts, so if those three things happen today, there’s a good chance stocks will come down.
I’ll cover all that, my daily hitlist of longs and shorts and more in this morning’s “Premarket Must Watch” video!
Roger Scott
Roger Scott Trading
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