(PRO Views are exclusive to PRO subscribers, giving them insight on the news of the day direct from a real investing pro. See the full discussion above.) The ability of the S & P 500 to hang on to its 20-day moving average after the downdraft Friday and recovery Monday is critical for the stock market’s short-term outlook, according to New York Stock Exchange insider Jay Woods. Stocks on Friday closed below their 20-day moving average of 6,667 for only the fourth time since mid-April. “Will the old support level become resistance, and take that next step lower or sideways?,” Woods asked before the market opened Monday. Ultimately, the S & P 500 on Monday recouped more than half of Friday’s pullback and closed at 6,655. (Watch the full video above.) For now, if the 20-day moving average level isn’t retaken soon or stocks continue their pull back, Woods said he will next look to see whether or not the market holds its ground above the S & P 500’s 50-day moving average. Another signal traders will watch this week is the CBOE Volatility Index , which briefly spiked as high as 22 on Friday. Stocks started Friday at record highs before President Donald Trump’s social media message threatening China with higher tariffs in response to limits on exports of rare earth minerals. “The President really got the volatility going,” said Woods, chief market strategist at Freedom Capital Markets. “We were getting through October, much like we were getting through those crazy months of August and September, without a hiccup. Well, October brings volatility.” The heated trade rhetoric cooled on Sunday when Trump again posted on social media, this time saying Sino-U.S. trade relations “will all be fine,” driving stocks higher Monday and sending the VIX lower, to a range between 18.6 and 20.8. @VX.1 5D mountain CBOE Volatility Index over the past 5 days Here’s what else Woods is watching this week: JPMorgan and other financials kick off third-quarter earnings on Tuesday. JPM, up 25% for the year heading into trading Monday and the nation’s largest bank, will be critical. CEO Jamie Dimon “is usually a little more pessimistic than the optimism we see with their earnings results. Gloom and doom from him usually bodes well for the market. Let’s see what he has to say,” Woods said. Other financials due to report this week include Citigroup , Wells Fargo, Goldman Sachs and Morgan Stanley , as well as leading regional banks . Regionals continue to lag, but mergers and acquisitions such as Fifth Third ‘s planned purchase of Comerica are starting to revive, Woods said, noting investors will listen closely for consolidation clues during management conference calls. Also on deck are earnings from transportation companies, ranging from United Airlines to freight rail carrier CSX to trucker JB Hunt . The transports have lagged this year, falling 5%. “Let’s see if we see a turnaround there,” Woods said, noting that if the economic expansion is to continue, “that’s where we want to see it.” Johnson & Johnson , American Express and Travelers , three of the 30 stocks in the Dow Jones Industrial Average, are also scheduled to release earnings this week. Travelers has just about kept pace with the S & P 500 so far this year. “Let’s see what they have to say — if they can continue those uptrends,” Woods said. “It’s not a tech week. It’s about the infrastructure. It’s about those industries that basically are the backbone of America,” he said. (This weekly Monday video is exclusively for CNBC PRO subscribers.) Correction: A previous version misspelled Jay Woods’ last name.
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