We've only got two trading days left this quarter, and believe me, this quarter is a huge sigh of relief to money managers around the world. They are going to preserve every possible cent of profit they can log for this quarter, since it's the first good one they've had in a while. So the bulls are going to have that tailwind helping them for a short while longer. Come July 1st, that disappears.
The volatility of the market has been in a slow grind down for eight months now. The VIX is less than one-third of its peak in October, which makes puts a great deal again, to my way of thinking. I've been buying up puts on high-priced stocks that expire anywhere between September 2009 and January 2010. As you can see from the trendline, all the hot air from the bear market has been let out of the VIX.
I try not to consider every trading day "a critical juncture", but honestly, this upcoming week is really important. Simply stated, if we can stay below June 11 highs, and we can crack last week's lows, the bears are going to take the upper hand. However, if the end of the quarter doesn't really mean anything in this tug-of-war, and we do push above June 11 highs, the bulls could be off and running to 1,000+ on the S&P in very short order.
Below, for example, is the OIH. It's actually a very nice basing pattern. If OIH slips under last week's lows, that will represent a cataclysmic failure of this otherwise strong pattern and would easily push the OIH back fifteen points or more. Persistent strength this upcoming week would give this a good chance of pushing much higher. I've got my money on the short side, with shorts in both OIH and USO.
It's much the same story with the MidCap 400. That bold horizontal line is a major retracement level. It did a fine job repelling the market earlier this month. I am of the opinion that, during this go-around, we won't even re-approach that level.
Relatively speaking, the NASDAQ has held up stronger than the listed markets. The head and shoulders you see elsewhere simply isn't present here. Should a breakout occur, I think this relative strength will carry over into the NASDAQ, accelerating it faster than its breathren. But, I say again, my money is almost exclusively on the short side. It was somewhat telling to me how mediocre my lottery plays behaved on Friday.
Considering I was on vacation all last week, I think Slope held up pretty well (in fact, had I not said anything, I don't think you would have even noticed). Please note than I am, today, pulling up the stakes from the beautiful house we're at (with its wireless high-speed Internet) and moving to, shall we say, simpler quarters. My ability to access the Internet truly will be more limited, so posts will be less frequent (considering it's a holiday week, with the market closed on Friday, it probably won't matter as much).
Oh, and as for water-skiing: the spring and summer have been so ridiculously mild in Northern California, I don't think there's any chance I'm even going near that lake. Mrs. Bear and I keep our own pool at 88 degrees since we're both cold water wimps. The idea of me plunging into low- to mid-60s water is almost out of the question.