Over the past few weeks, I have closely monitored the Volatility Index ( $Cboe Volatility Index(VIX)$ ) and the Nasdaq 100 ( $NASDAQ 100(NDX)$ ).
The VIX flashed its initial warning sign when October started, and I called for an imminent volatility bounce during the next days based on a transparent indicator signal. The following week, the NDX was forming a top by breaching key bands and retracing. Since then, major supports have failed. This started with the 20-week moving average for both the NDX and $S&P 500(.SPX)$ , along with by key annual levels like 29,036 and 7,638 respectively.
In last Thursday’s update, “The Most Important Chart of the Week,” I noted the impulsive behavior in tech using the $E-mini Nasdaq 100 - main 2612(NQmain)$ and the high probability of a test at the 40-week moving average. That level was tagged today for the NDX, establishing a critical structural checkpoint. The question now is whether this flush can hold as a sustainable bottom.
Both the SPX and NDX bounced today, recovering the 7,638 annual level for SPX, which sits in confluence with other key monthly lines and moving averages described last Saturday, creating a constructive setup. Tech must now reclaim its own key levels, especially since the 40WMA has acted as a major bounce zone just as it has in previous pullbacks since 2023. Losing that moving average has made the difference between a pullback and a double digit correction.
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