That seems to be the most appropriate question to ask now. There was a large 360 pts day the last two weeks on Wednesday. Now it looks like a “dead cat” bounce. Trading was light this past Thanksgiving week, with extremely high volatility. The market went down 200 pts on Wednesday and rose 182 points on Friday during the shortened session. Looking at the charts below on the SPY (Spiders), we look precariously close to breaking the 141 level and challenging the 137 level last experienced in August. I’m not committing to options and equity positions until I see tests of these levels and what the does thereafter. Remember, we have to learn to TRADE WHAT WE SEE, and NOT WHAT WE THINK.
To confound matters further, VIX is also giving conflicting signals. Also spikes in VIX above 30 usually signal market bottoms, the spike we got on Nov 12 looks anything but a market bottom. VIX is well supported by the 20 day Moving Average (MA) and the Trendline which is drawn in on chart shown. An uptrending VIX has a “bearish” bias. This however could be good for FOREX trades – Yen and US Dollar strengthening. In fact, this is what we have been seeing. Only the EURO “anti dollar” is defying the trend.
The question is: With all the pundits waiting for the markets to test the August lows, the market could just go up and defy logic, leaving all the bears in the dust again. Isn’t that what the market is good at anyway?
ChiefShook
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