What a boring day! At least on Monday, the price moved some, but Tuesday was just boring. There was sideways trading ahead of today’s March retail sales report. I’m not sure how much that was playing into yesterday’s price action, but it was boring.
When you go from big, impulsive moves to these sideways, boring times, it is a warning message to me that we are just consolidating sideways here, that this is not the start of some big initiation higher.
But with the VIX at 29, a few more days like yesterday, and we could see it at 23, and if the VIX goes to 23, that would suggest further upside. So either volatility is going to pick up, and “something” will trigger another leg down, or the slow burn in volatility will help grind stocks higher.
Volume was also non-existent yesterday, which makes the price action even more interesting. This suggests a lack of sellers in the market, so the fact that the market is stuck with anaemic volume levels tells us the bulls may be in trouble.
For various reasons, it would seem to me that another leg lower is likely. Maybe it’s because of the way the S&P 500 chart looks, with those two big down legs, which look more like waves 1 and 3 to me. Right now, a lack of movement is the market’s friend because the less it moves, the more IV will burn off, and the more likely it is to go higher, but something suggests to me that a move higher isn’t going to happen.