Dan Passarelli, CEO - Market Taker Mentoring

Following yesterday's down day as a result of Apple saying that it was going to scale back on hiring and spending, a little bit in fear of a potential recession, well, the market rebounded quite a bit today and it went over that key level that I've talked about in a lot of our videos lately. Today the S&P 500 went above and closed above the 50 day moving average. Most of my trades don't last 50 days, right? So why is the 50 day moving average so important?

It's because for long term investors and for funds that invest money for the long term, they use the 50 day moving average as a very key signal. So if we close above the 50 day moving average, we've got a really good chance of seeing at least a little bit of follow through. Now, again, as I said in the past, I don't expect markets to make new all time highs anytime soon, but I wouldn't be surprised to see some follow through up to and through the 400 level, maybe even up to the 410 level, possibly up to the next key resistance level, which is at around 420. So we're in the midst of earnings season and next week we have the FOMC announcements. So these next two to three weeks are going to be really key for the direction of the market as a whole going forward.

Another thing to talk about today is that while the volatility as measured by the VIX (or VOLQ if you're looking at the Nasdaq) is historically high, the markets are moving at a really high volatility. And it's a little bit less evident here using the ThinkorSwim charts because ThinkorSwim slightly overvalues the implied volatility on the volatility charts because they use the same calculation that CBOE uses for the VIX, which gives us a higher value. But in NDX, for example, by looking at VOLQ that was pricing in less than a 2% move and you can see that Nasdaq moved over 3% today. we're seeing much bigger moves then I think sometimes volatility lets on. So I want to be careful staying the right side of things, especially if you're trading earnings, only trade earnings with a plan and I hope that helps.