Category Archives: Indicators

SPX:VIX RATIO — The REAL Test for Bulls

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I last wrote about the SPX:VIX ratio in my post of October 15th.

As shown on the 20-Year Daily ratio chart below, bulls have pushed the price back up to close out this week at major resistance around the 120.00 level. Failure to hold 120.00 could very well see price re-test the 60.00 level, or lower…watch for panic selling of equities should the 60.00 level be breached and held.

The REAL test for sustained market bullishness will be whether price can reclaim and hold the 150.00 level, which was a milestone level this ratio reached before succumbing to pressures of the 2007/08 financial crisis.

The Air Is Getting Thin

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SPX broke above the daily middle band yesterday and tested the 100 DMA. More importantly though, the high yesterday was within a couple of points of testing the weekly middle band. Given that today is Friday that may well be formidable resistance today, and while I’d quite like to see a test of yesterday’s high today, I’m very doubtful about seeing a move significantly higher. This is closing resistance, so only the closing price today is important for that. We could see a move somewhat higher intraday. SPX weekly chart:

141024 SPX Weekly Middle Band Test

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Revisiting Truth’s Moment

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Way back on August 30, I did a post called Past Fear, Present Fear, which offered up an analog of the VIX (please read it if you don’t remember; it’s a pretty good post). I would daresay it was one of the best posts I did in 2014, and things certainly unfolded as I hoped they would (although today was no fun for me). I followed up on October 9th with my Moment of Truth post, which was just before the markets started really falling hard. Thus – so far, so good. (more…)

What Do the SPX World Indices Forecast?

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The following four 3-Year Daily charts show the relative strength/weakness of the SPX compared with the WORLD Index.

Chart #1 shows a fairly steady climb of the SPX during the past three years. Recent action in October has put in a lower low and broken the uptrend on this daily timeframe. Lower lows have also been made in all three indicators (RSI, MACD & Stochastics)…hinting of further weakness ahead.

CHART #1

Chart #2 shows a more difficult climb of the WORLD Index once it broke above major resistance in January of 2013. This market topped out in July of this year, lost all of its 2014 gains, along with much of its 2013 gains, and hasn’t yet recovered. (more…)

Twenty-Two

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You’ll pardon me if I pin the Gold Medal for Technical Analysis on my bare chest for my VIX prediction. As I said virtually every single day on TastyTrade for weeks, and as I said here countless times as well, I intended to stay aggressively short until the VIX reached “between 22 and 23″. Well, it peaked at 22.46 today, and that’s when I got out of any big shorts and – gasp – actually bought a bunch of stocks. The graph is fantastically glorious in its clarity. Thank you; thank you; yes, it is a beautiful thing. (more…)

In the Shadow of a Volcano

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The very strong decline yesterday caught me by surprise, as we had a very nice setup to retest the highs and a strong daily buy signal to back that up. I was expecting SPX to hold the 1940-50 area in line with fib retracement targets and that didn’t happen. So where does that leave us this morning?

Well in terms of the buy signal these are most immediately bullish in the context of a supportive pattern setup. We had one yesterday morning and we don’t have it now. The very nice double bottom setup is badly, and most likely fatally, damaged. I’m not a big believer in triple bottoms, which are rare, and tend to be raised as a possibility mainly when a possible double bottom is in the process of coming apart. The falling megaphone target back at the highs was only really interesting in the context of that double bottom. My megaphone targets as counter-trend patterns are the standard range of fibonacci retracements, and this one has already retraced slightly over 50% of the megaphone move. (more…)

Thrills and Spills

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Well I was saying yesterday morning that I was uneasy about the lack of a retest of Monday’s high and that there was still plenty of scope for surprises between 1935 and 1904 SPX, and we had a very impressive reversal yesterday after SPX made a marginal new low at 1925. That reversal was an amazing 45 points from the morning low to the closing highs, and brought to mind some pleasant hours I spent a while back in Las Vegas getting an adrenal gland workout at the High Roller, which at that time then sported the highest rollercoaster in the world among other terrifying rides. I was sad to read that this was all demolished in 2005, as I would have loved to do that all over again as and when I return to Las Vegas. Las Vegas – High Roller:

las-vegas high roller

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