S&P 500 [$SPX] Weekly Chart – 14-Period RSI

Relative Strength Index Remains Overbought, Reaching Highest Point of Nine Year Bull Market at 84 The S&P 500 finished eleven out of twelve months in 2017 with positive gains for the period [Ending March essentially unchanged at -0.04%] pushing the index to its most Overbought condition of the ongoing nine-year bull market. The Index reaches 84 in December, as prices encounter resistance at the Return Line of the Channel. As previously discussed in Menotomy’s Q1 2017 Outlook, as forecast, price action over the past twelve months resembled the well-defined Uptrend Channel of 2013. Nominal returns for the two calendar years were approximately equal, adding over 430 points to the index value in each case. Returning over 20% [Including Dividends] in 2017 with minimal drawdown. Only -3.25% peak-to-trough in March. S&P 500 [$SPX] Weekly Chart – 50 Week

Prices Experiencing Resistance at Return Line of Trend Channel, Coinciding w/ Overbought Condition

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Following Sustained Advance, Retracement to December Closing Low at 2,630 Appears Likely After closing a record high to end the month of November, the first of December generated one of the most volatile sessions of 2017, dropping over 1.5% before reversing higher and closing nearly unchanged. Testing 2,600 on an intra-day basis, this selloff created an important pivot low separating a sequence of record highs. On a closing basis, support for a further advance is likely to materialize at the following levels -2,650: Representing the most recent pivot low and corresponding with the November month-end record close -2,630: Lowest closing levels of December following initially spike, represents rising trendline support

S&P 500 [$SPX] Daily Chart – Implied / Bollinger Bands ®

Implied Volatility Remains Exceptionally Low, Rangebound in Q4 Between 8-13

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VIX Reaches New Record Low in November, Falling Below 9 Level for Fourth Time [of Five] in History Implied volatility remained muted in Q4, with only a single close above 12, the longest such stretch of VIX closing values below that level since 2006. The volatility cycle peaks in April and August (Points A & B above) would indicate a 4-months cycle, implying peak IV in December. This volatility was not realized however, as an intra-day spike above 14 was reversed, closing below the 12 level. Since that time, IV has once again fallen below the 9 level, for only the fifth time in the history of the index. Consolidation near historic lows continues as the past four weeks has generated a rangebound VIX, between 9-12. Compression may be a more apt term when discussing volatility as prolonged periods at low levels, trading in tight ranges eventually results in a spike S&P 500 [$SPX] Hourly Chart – OHLC

Index Holds 2,500 on a Closing Basis, Following December 1st Drop From & Return to Record High Levels

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