VIX Snaps Back, the S&P Bounces Off Support and November Starts With a Bullish Edge

Morning traders. Friday brought the big sell off and plenty of fear mongering, the weekend brought no major news or catalyst, and today brings a fresh month with the mid terms in tow.

We’ll look at VIX out the gate, then the usual snap overview, the Almanac’s take on November, SPX, crude and the Double Dip. Scroll on down.

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Market Snapshot – the main stock indexes turning around

• S&P 500 futures: 7,651.75 (+0.49%)
• NazQuack futures: 28,775.25 (+0.85%)
• Uncle Dow futures: 52,182 (+0.49%)
• Uncle Russ futures: 2,843.8 (+0.78%)
• Gold: 3,906.7 (+0.56%)
• Crude Oil: 99.72 (-3.14%)
• VIX: 18.83 (-2.99%)
• Bitcoin: 77,954.18 (-0.39%)

Anyhoos, looking at the usual snap overview, you can see the main stock indexes turning around and the S&P reacting off the Sept lows (Jun lows for Naz, Russ and Dow).

WANTED: one safe haven. Last seen fleeing the sell-off at speed. Do not approach with your savings.

The weird observation is that amongst all the fear mongering, the usual flight to safety, gold, was making a fast getaway to Bears’Ville.

Crude is making a double top in the double top, and crypto’s Uptober never made it, but is evolving… more on crude in a moment.

VIX – mean reverting and fast acting

Let’s look at VIX out the gate. Friday, inside the members community, I posted my VIX trade in real time. The logic is simple: S&P at support despite the big sell off, and there was no major catalyst, unless we were going to see a TACO type trade over the weekend. My comments at the time are below.

VIX and Imp Vol is mean reverting and fast acting.

The first entry point (lower red line) corresponded with prior peaks back in Jul/Aug.

The second entry point (upper red line) corresponded with prior peaks back in Jul.

In both cases, S&P/Naz at support lows and the same levels where VIX peaked. We’ve seen the snap back a few times at these levels.

VIX is paying out quickly already, so now the only fly in the ointment is any BS news or TACO manoeuvring over the weekend.

Coming into today’s session, and with no major news or catalyst over the weekend, the trade is playing out nicely.

November Seasonality – …and then there is the mid terms

November. Strong start, mid-month dip, strong finish. Terms and Thanksgiving apply.

From the Almanac: according to the 2027 Stock Trader’s Almanac, the first trading day of November ranks second best of all monthly first trading days since September 1997 by DJIA points gained. Over the last 25 years the S&P 500 and NASDAQ have each closed higher 17 times on the day, the DJIA 16, with average gains running from 0.22% (S&P 500) to 0.38% (NASDAQ). After a bearish run from 2005 to 2011, the S&P 500 and NASDAQ have been up 11 of the last 14 years, and each of the first 6 days of November has been up 60% or more of the time for the S&P 500 over the last 21 years.

The overnight moves are already pushing bullish.

The Almanac’s midterm read: November’s strength tends to come at the start and the end with a dip in between. Midterm Novembers have climbed about 2% by the 8th trading day, pulled back into the 13th to 14th, then rallied into month end, led by NASDAQ at about +3.5% and the Russell 2000 at about +3.2%. They flag the 12th trading day for small caps (Russell 2000 up just 12 times in 42 years, averaging -0.39%), and note monthly options expiration lands the week before Thanksgiving this year, with their Thanksgiving play being to buy weakness before the holiday and sell into strength around it.

Gonna be a fun month.

© Hirsch Holdings Inc., StockTradersAlmanac.com. All rights reserved.

SPX – x marks the spot again

Over on my usual SPX swing chart we can see that x marks the spot again, and should we see the gap high hold, then we are pushing back in to the previously established range lows. As it’s moving back into the prior range, the range assessments and expectations are likely to continue, and from the range lows to the range highs is expected.

7750 seems to make most sense in the short term.

Crude Oil – a double top in the double top

Inside the double top sits a smaller double top. Inside that, a man with a ruler, weeping.

Crude oil developed a small double top inside of the larger double top and pushed a straight line move overnight down to my over/under line at the big round number of $100.

A clean move and set up below that level could see a move back to the $88/$90 zone.

Double Dip – some great wins last week

On my new Double Dip strategy, we had some great wins last week. DIA was the only loss, and we have a few still open and in profits too.

Today will see XLY fire off from Friday’s setup.