Category Archives: Indicators

Dead Soldiers Stay Dead

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“No bastard ever won a war by dying for his country.  He won it by making the other poor dumb bastard die for his country.”  -George S. Patton

Did you hear about that new medical invention that can now bring the dead back to life?!  No?  Oh, that’s because it doesn’t exist.  Just like there is no way to bring the money we lost in a trade back into the account.  Pardon the morbid start to this commentary but it is meant to shock us into paying attention to a very important point:

Small losses are better than large losses.

cut loss

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Bearish Setup – By ConvictScott

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As all of you know I am probably the least bearish trader around. I am a trend following pattern trader. However, to all things a season, and it is the exact time for the bears to finally do some technical damage to the tape.

Why do I say this? Because as pullbacks have gotten shallower and shallower over the last few months volatility (real volatility in price right now, not the market take on implied future volatility in the VIX) has fallen to a historical extreme and then painted an uptick. I posted these two charts on Sunday and I think they are well worth a revisit.

ConvictScottPic1

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Price Action in the SPX:VIX Ratio Still Volatile…

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Further to my last post on the SPX:VIX ratio, price is still consolidating and we’re awaiting a break one way or the other (above 180.00 or below 110.00).

Meanwhile, volatile swings continue, pushing down record-high Momentum levels…a drop below the zero level (see Weekly chart below) could see a break of this weekly uptrend begin to the downside (around the 110.00 price level). However, we may see a retest of the 130.00 level on the pretext of a major breakdown followed by a surge in price action. (more…)

Bear Window Closing

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My daughter is getting braces tomorrow morning and I’m going with her so I’m unlikely to manage to put a post together before the open tomorrow. I’ve given this some thought and decided to do a short post tonight and then if I see anything else worth posting before the open tomorrow I’ll post it on twitter then or, if I get back in enough time before the open, I might manage to put up another short post then, but at the moment I think that’s unlikely.

SPX had a decent day yesterday, closing on the key resistance level at 1861 that I flagged as an important bull/bear level in the morning. That may hold tomorrow, as the stats for the last day of the second quarter are bearish, with Dow showing 33% positive closes over the last twenty years or so and SPX at 38%. I looked at the last ten years of these on SPX in detail and pulled out the following interesting points: (more…)

SPX:VIX Ratio Consolidating at Record High Levels

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Since my post of June 8th (wherein I noted that the SPX:VIX ratio had overshot its technical resistance limit, and price and Momentum had reached all-time record highs), price has been fluctuating, primarily above the 150.00 level, currently near-term support, as shown on the following 20-year Weekly ratio chart.

As long as price remains above 150.00 I’d say that buying will re-enter the SPX and push price even higher on this ratio. We’ll see whether Momentum confirms, if such a scenario occurs…and, if it signals support for any sustained buying above resistance at 180.00. (more…)

A Road to 1884

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SPX made my target area at 1965-70 and rejected hard there. A candidate significant high for a 10%+ correction is in place but we’re going to need to see some follow through here first to open up the obvious downside targets for that correction. On the SPX 60min chart the 50 hour MA was broken near the close yesterday and SPX closed below it. I’d like to see that established as resistance today and after that any significant break back above it would be a warning that this retracement might be over. (more…)

One Last Push

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On the FOMC stats I was looking at last week, of the four similar instances since the start of 2010, and of the three of those that topped in the next few days, one topped on the Monday afterwards, and the other two topped on the Tuesday. If we are to see that intraday high today my target range is in the 1965-70 area and that would respect resistance on the primary rising channel on my weekly chart below. SPX weekly chart: (more…)