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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.
Over the last 10 days the market and SPY in particular have rallied off the lows of 135.76. Since then SPY has moved upwards establishing two new trendlines. The first is the extension of the long-term trend from December the second is a short-term trendline from 4/10. SPY upwards movement has also been capped by a uptrending channel. All-in-all this has created a bear flag bearish pattern.
Bearish Flag: Is a bearish continuation pattern that is formed after a down movement. Its is characterized by a sweeping down movement followed by an upwards consolidation.
- Measured Move: The "Flag Pole" for SPY bear flag is about 6, from 141.82 to 135.76. This means the estimated downwards movement of SPY would be 6 points from its break.
- Price Target: Depending on where SPY breaks a price target of this move would be 132.66
NYMO or the McClellan Oscillator has hit a very low point -hitting -103 today. This does not happen to often, the last time was November 23rd.
Below is a chart of the return of SPY 1 day after NYMO was below 100 from October
2009-Today: From the middle of 2009 to now, 4 out of 9 times the market was up the next day after NYMO was below 100. With the highest being 4%. 5 out of 9 times the market closed down, the lowest was -6.5%
1. 2.14 % 3. 4.04% 5. 1.47% 7. -6.51% 9. -.19%
2.. -1.49% 4. -3.78% 6. -.14% 8. 4.65%
XOM has formed a triangle inside its range or bullish rectangle over the last two months. This is some serious consolidation after a move upwards off the October lows. Both the Range or the Bullish rectangle and the triangle are consider bullish continuation patterns. That is that they are formed by consolidation of price after trending in an upwards direction. When the stock breaks these patterns it begins its upwards climb again.
Ten Year: Since October the 10 year has remained in a tight range and now it is testing the top of this range at 21.00 or a 2.10% yield. TNX test the top of this range on Monday and has since backed off of it. Since October there has been a pattern in the market with TNX as it hits 21.00 . Each time TNX gets to this level it foreshadowed the next "dip" in the market. It occurred in November and December and also back in September.
Overall: Watch 21.00 on the then year, if it breaks above it the market will rally but as of right now based on some of the stalling action going on and the pattern that has formed with TNX a dip lower is more likely.
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