Today marked a day of relative indecision for the US Stock Market.  The Dow & S&P are trapped just beneath their 200 day moving average, and formed a strange doji pattern at this level, while the VIX reached new lows for the year.

Let’s look at these developments:

S&P 500:

The NASDAQ actually closed higher than its 200 day average, while these two indexes found resistance there.  Dojis (where the close and the open are almost identical) are signals of ‘indecision’ and can precede short-term reversals in price.

The only issue is that there is seemingly strong support beneath price via the rising 20 and 50 day moving averages on both indexes.  Volatility has been contracting and price swings have narrowed.

Also, one could say ‘fear’ is leaving the market due to the VIX (Volatility Index) making new lows for 2008:

One could imagine the complacency at these levels as hedge positions are unwound.  Also, the market has risen quite steadily since early March, and traders may be lulled into a potentially false sense of security.  Let’s see if the bears can have their say, since the bulls (buyers) have been rather victorious for the last few weeks.

As always, check out the Market Club for additional resources and ideas.