Morning Notes — Near Term Roadmap

We continue to view the recent correction as bullish consolidation within an ongoing longer-term rally.  However, the S&P 500 (SPX) will likely require a period of base building before it can moves through resistance of ~4,600.  During that time, equity market volatility should have a chance to normalize.  The CBOE Volatility Index (VIX) has declined from a cycle high of 31.96 last Wednesday to 23.79 today. The VIX has moving average support in the 19.20-22.20 range, and we wouldn’t be surprised by a bounce and a SPX retest of the 1/24 intraday low at 4222. Most market corrections include a retest of the lows and about half of those retests include a shallow break to a new low.  If it happens, the break will be supported by nearly every headline, but it will also likely trigger several systematic buy signals.