Thursday’s earnings announcements:
Before the open: Delta Air Lines (DAL), Domino’s (DPZ), Neogen (NEOG), Tilray (TLRY)
After the close: Aehr Test Systems (AEHR), Oil-Dri (ODC)
Economic news:
Initial Jobless Claims – 8:30am
Consumer Price Index – 8:30am
Market Thoughts
The Volatility Index (VIX) spiked 18% on Monday after closing at 22.64 with the intraday high reaching 23.03. Tuesday’s peak reached 23.14 with yesterday’s pullback keeping the index between 20-24.
For new subscribers, here were our thoughts on the VIX coming into the week:
“Volatility continues to give us great clues (and teases) on the possible near-term direction of the market. The VIX closed above its 50-day moving average on Tuesday and cleared 20 every day afterwards. The close above 20 on Thursday was slightly bearish. However, the close back below 20 on Friday saved the bulls.
This is why we always say to wait for multiple closes above resistance, or below support levels, to confirm possible breakouts or breakdowns. We nailed the action in the VIX on August 2nd after the index closed above 20 for the first time in 2024. We said a move above 34 would cause panic selling and sure enough the August 5th high zoomed to 65.73.
The VIX remains elevated and will first need to clear 17.50 like we noted earlier, but more importantly, closes below 15 are likely needed to confirm another breakout across the board for the major indexes. On the flip side, a move above 24 and the September 6th peak at 23.76 likely gets 30-34 in focus while signaling a near-term market top.”
As far as the major indexes, let’s start with the small-caps as they remained trapped between 2,175-2,225 over the past 12 sessions. A pop above 2,225 gets our possible breakout target at 2,260 in focus and resistance from July and September.
A break below 2,175 and a slightly downward slopping 50-day moving average (at 2,161) will likely dictate weakness towards 2,135. This level also represents the exact breakouts from mid-July, mid-August, and mid-September.
