Daily Archives: May 4, 2012

Put/Call Ratio at .79 VIX below 20 and SPY

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Below are two charts showing centered around CPCE the Put/Call Ratio.  On Thursday the CPCE hit .79 with the VIX below 20.  The charts below indicate other times when this has happened.  The .79 CPCE is not a high number at all but in looking at it with a low VIX it is.  What the charts show is that the market has a tendency to rally when CPCE is at .79.  

The chart also shows that the CPCE will climb higher before the market bottoms when VIX climbs higher.  This means whats VIX and the market, if VIX rallys above 17.84 a resistance level, there could be additional downside, if not and we see VIX settling back down the market may be bottoming.   Feel free to discuss.

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A Comparison of DBC and AUD/USD

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Further to my post of May 2nd, there is a similarity in the behaviour of price action since last May, as reflected in the following two Daily charts of the Commodities ETF (DBC) and the AUD/USD forex pair.

At the moment, each one is trading below both the 50 sma (red) and 200 sma (pink), both are at their respective lower Bollinger Band, the MACD has just hooked down on Thursday's close, and the Stochastics has crossed over to the downside. The DBC is approaching major support in the vicinity of 27.47, while the AUD/USD is trading immediately below trendline apex support of 1.0274.

A break with conviction and hold below these respective support levels would indicate further weakness in commodities, and possibly drag the equities markets further down…two to watch for further direction.