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Technical Indicators Point to More Short Term Volatility

Today's move was an important one for more than the fact that it snapped a streak of low volatility trading days.  Technical patterns have now developed that would suggest that more volatility is likely in the coming days.

Here's a look at the SPY chart:


Important Points of Note:
  • The S&P closed below its 20 day moving average for the first time since mid February
  • The index is now inside of a very large moving average variance gap which has been shrinking for the past week now.
  • This sets up a 'fill gap pattern' where the index is likely to trade inside of the range between the 20 and 50 day moving averages before breaking out again.
For the time being, the market does not appear to be at immediate risk of a systemic correction like were seen in August and January.  However, it does look like it will be a while before the S&P approaches its recent highs. 

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