Looking at the technicals, the red circles identify the major market tops over the last three years. Do you notice a pattern? Typically, when the 15 level and lower is explored a large market sell off occurs. One-month ago marked a top but the equities markets did not venture all that much lower in light of the Draghi and Bernanke decisions on tap. The behavior now is similar to the early 2011 behavior with positive divergence forming that launched the VIX higher. Note the W pattern forming, all it needs is the upward move to lock it in. When the markets topped in April this year, RSI and the MACD line still wanted to see a lower low in price in the future, and price came back down to print that low a month ago in August. Thus, the indicators are now in universal agreement with positive divergence so VIX is sitting on the launch pad and a strong upward move from the red circle in the margin would be the projection.
The chart wants volatility to sky rocket, which is also in sinc with expected seasonality where volatility bottoms in August-ish and then moves up into the end of the year. However, Bernanke is on top of the ladder with his money printing press and each time volatility wants to climb he keeps stepping on its fingers. The chart says big up coming which means bid down for markets. Do you fight the Fed? This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
what you seem not understand is that the rules have changed and yes the charting parameters have changed, if this was not true a sell off would have occurred before the QE3. Bernarke did this A for politics and B to try to resurrect the weakness in the sectors. To prop them up. As mostly a bear, and as someone who was completely wrong about the CRB number, you still try to defend the logic behind your game when something else is running the show. Of course a pullback will happen, of course the Bears will eventually feed, it's so obvious. What you need to do is change your tech analysis, and readjust your charts to a new era of the game. Otherwise I hope pie making is something you can turn into a living.
ReplyDeleteAnon, you need to do lots more homework to come up to speed with TA so you can discuss it properly and in the correct contexts. Note Keybot the Quant (which is the metric you need to reference in the short to intermediate time frame you refernce), has been bullish the whole time. Keystone's shorter term short positions have received a beating over the last week, but they are hedges and needed to offset Keybot. The port is currently weighted almost 70% long net-net. Think of trading as three dimensional chess, you are working in multiple time frames using multiple trading techniques, playing both long and short positions continuously. Do not think in the binary up and down only. If so identify the exact index, time frame, etc...
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