By Lawrence G. McMillan
The stock market, as measured by the Standard & Poor’s 500 Index, remains volatile within a trading range. It reverses direction at will, and hasn’t been able to sustain moves for weeks now. Today’s trading is typical of that description. In fact, it’s been volatile in this manner all week.
From the time that S&P futures opened in Globex trading on Sunday night, there have been 10 moves of 20 points or more. That’s roughly 150 Dow Jones Industrial Average points. This is highly unusual action and clearly demonstrates the skittishness of investors, which translates into extreme market volatility.
Last week, we referred to the rising support line on the S&P 500 SPX -2.07% chart as being significant. It was broken on Wednesday, but — as has often been the case in recent weeks — any swift move is so universally jumped on by traders, that the market almost immediately becomes severely oversold (or overbought on upside moves). As a result, SPX bounced off the 1,120 area then rallied right back up through the support line — eventually topping out near 1,200 yesterday...
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