The Moment of Truth for S&P’s ($SPY)

We have now seen roughly two-thirds of the December S&P ($SPY) price gain wiped out by the second session of the new trading year. A break of $201 on the $SPY (the ETF that tracks the S&P 500) would put substantial pressure on the bulls.

The Volatility Index ($VIX) fighting above $21, is at a level that has not at this stage been held into the close. This would put volatility back on the map. On the short-term this would leave the door open for a bounce. That is what we will be looking for into the Midday and Close.

One other positive for the bulls is the small-caps ($IWM) continuing to lead and not pull back with the velocity that the big large-cap names have in the past four sessions. I will be looking to add to my longs if the market holds $201 on the $SPY, and/or the $VIX not breaking and closing above $21.

I will look to unwind a portion of my volatility hedge, especially if the $VIX pops to $24. At this level I would look to buy quality names from my focus list more aggressively.

See you next time at the Corner!