The Market May Be Setting Up to Break Sharply Lower
Michael Kramer | Nov 09, 2022 03:30AM ET
Stocks finished yesterday higher by around 56 bps to close at 3828. The S&P 500 had been up sharply, more than 1%, but managed to give it all back intraday, even turning negative at one point. It appears that the futures have formed a diamond reversal pattern. These aren’t the most straightforward patterns to find, but this one is very close to breaking, so we should find out if it is correct relatively soon. If this does work out, I think we see 3,640, followed by new lows.
The VVIX, which measures the volatility of the VIX, appears it may have bottomed, and yesterday it started to push higher. We will want to see if this continues, as it can be a good leading indicator for the direction of the VIX and the overall S&P 500. If the VVIX starts to rise, the VIX is likely not far behind.
Disney's (NYSE:DIS) shares dropped after posting disappointing quarterly results. You are talking about a stock that is probably heading back to the low to mid-80s. At the of end the day, this stock has gone nowhere since late 2014.
Tesla (NASDAQ:TSLA) continues lower, dropping further yesterday. It is in between support at $180 and resistance at $209. The $180 area does become important because after that there is a long way down with a gap to fill to around $136. Not only that, but $180 could serve as the neckline of a Head And Shoulders pattern, and breaking that neckline would open the door to a new set of problems.
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