Friday, July 31, 2009

Short term sentiment change


















To Bearish.

I see a move down next week.
Here are 5 things to chew on.
I almost now wish I shorted the close more aggressively than I did.
(my apologies for all the url links, instead of posting all images. Some are older observations)


1) SPX and VIX both up on Friday: 9 of the past 12, resulted in a down day for the next day.

http://lh6.ggpht.com/_APmrYvpA45s/SnNnkmUw8QI/AAAAAAAAEEs/32rFGtLH_R0/s1600-h/SPXVIXWatch%5B2%5D.png
Courtesy of Cobra's Market View (link on right)


2) Friday's end of the day spike in VIX makes it even more interesting.
(the last time i recall one bigger than Friday's, was 2 Jan 09. Which was a prelude to a large
intermediate move down)

http://lh3.ggpht.com/_APmrYvpA45s/SnNnlKrjmZI/AAAAAAAAEE0/hZxnMwXpQvA/s1600-h/VIX15min%5B2%5D.png (Friday)

http://i204.photobucket.com/albums/bb15/Erik28tx/vix_5min.jpg
(Jan 2nd, 2009)

3) SPX and VIX both up for the week
(although one might "assume" that since on daily basis equates to 75% down probability, this would be automatically "mega-bearish". However, the past 2 times this happened were actually large intermediate direction changing points, Mid Sep 08 and Mid Mar 09 were the past two. This one is arguable, as it has come before a crash as well as before a large rally. Also the last candle stick structure looks almost identical to the March week, there can be a bullish argument for this. For probability sake, I think it's best to say that "for now" we can call this one UNDETERMINED as of yet. So I wont say this points bearish, however since its a very rare occurrence and has happened right at the crash and the rally "start"... I wanted to mention it here.)

http://stockcharts.com/h-sc/ui?s=$VIX&p=W&yr=1&mn=0&dy=0&id=p68264773822&listNum=12&a=174352066

4) USD / SPY decoupling
The dollar was absolutely hammered Friday, yet the market was barely up.
The last time I remember seeing a divergence that strong was 19 March.
(on 20 March, the spy fell over 2%)

http://2.bp.blogspot.com/_Qdtp9kZdS-Y/ScMtQZdrZyI/AAAAAAAAAE8/3WbvcK1CGtc/s1600-h/UUP.jpg


5) Weekly dogi at key long term resistance on the Leading index ($NDX)

http://stockcharts.com/h-sc/ui?s=$NDX&p=W&yr=3&mn=0&dy=0&id=p25925276563&a=172339768&listNum=12&listNum=12

Broad Market Pullback "target": 1525 $NDX (trendline)

http://stockcharts.com/h-sc/ui?s=$NDX&p=D&yr=0&mn=6&dy=0&id=p17589378026&a=171083389&listNum=12

..
Disclosure: Long DZZ (1 swing) & Short MAR, AEM... Long SRS, QID (4 short terms)

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