35 replies to this topic

[IYB]

Don, seems the BPCOMPQ is holding your signal back...

Any thoughts on switching to BPNYA or BPSPX, seems you would have gotten sells with those along with the other 6...

I was gonna say the same. All day/ weekly "13 EMA"s are above the prices = sell. The trend is down. And they are expecting would be, should be............no idea based on what.

Good to see you back here Mikey. I look at it in precisely the opposite way, i.e., that BPCOMPQ has indeed held back an SS sell signal {kept the Seven Sentinels in uptrend mode} precisely because the trend, globally, is solidly up- despite our local "Fiscal Cliff Obsession".... and that we will see new SPX highs ahead. Very best regards, D

http://stockcharts.com/c-sc/sc?s=$SSEC&p=D&yr=0&mn=6&dy=0&i=p85638321733&a=286231091&r=805.png

http://stockcharts.com/c-sc/sc?s=$DJW&p=M&yr=13&mn=0&dy=0&i=p19689147270&a=171272749&r=676.png

http://stockcharts.com/c-sc/sc?s=$NIKK&p=D&yr=0&mn=4&dy=0&i=p13891715440&a=287371481&r=280.png

http://stockcharts.com/c-sc/sc?s=$SPX&p=M&yr=12&mn=6&dy=0&i=p75423767004&a=181755078&r=1791.png

Edited by IYB, 29 December 2012 - 08:18 PM.

[DrSP]

Ogm, If you are looking at a market rally, there is a high chance of that happening with VIX going down. But, VXX/ UVXY going down? I doubt it because of the backwardation set in right now. http://www.cboe.com/...uresprices.aspx So, even if the market rallied for few days here, UVXY may not plunge much now but just stabilise here before the market goes down again and UVXY rallying up.

I don't think VIX over 20 is sustainable here. I've actually added UVXY at 31 after hours. I'll make money on it, if not tomorrow then a week from now. I can wait.

We're in a very thin, holiday market, and the time for tax selling is ending. Once that is behind us, and the FC proves to be a non event, volatility will die down.

UVXY carries front and second month volatility, I certainly don't see the news flow that would justify rise of volatility in the future, sustainable beyond this short term spike. This is all very temporary.

I feel that you are talking your positions and not your charts. My opinion is also same on another one who is bullish in this thread. And also our timeframes could be different. But, if we look at the daily charts, my opinion is any rally would be a good place to sell short. In fact, good short sellers don't short at the tops. They wait, look for oversold rallies to sell short. And I reckon we will get a good chance to short.

New highs? Forget it for atleast the next 3 months. I am not even sure why SSEC is in this thread. SSEC - unrelated market to US, topped in 2008 and haven't gone anywhere since mid-2009. Close to zero correlation to any global market.

Edited by DrSP, 30 December 2012 - 11:47 AM.

[ogm]

I feel that you are talking your positions and not your charts.

I've posted the broadest index daily chart. I don't see a downtrend there. I see a dip to moving averages on low volume, accompanied by high levels of fear. So I'm buying the dip. Selling the fear. The instrument of choice is the one that has a 98% annual decay built into it already. Russell looks very similar. A dip to moving averages in an uptrend. That's the way I see the charts. SPX is a little weaker, but broad indexes look good, IMO. How is it not trading the charts ?

Edited by ogm, 30 December 2012 - 12:25 PM.

[DrSP]

I feel that you are talking your positions and not your charts.

I've posted the broadest index daily chart. I don't see a downtrend there. I see a dip to moving averages on low volume, accompanied by high levels of fear. So I'm buying the dip. Selling the fear. The instrument of choice is the one that has a 98% annual decay built into it already. Russell looks very similar. A dip to moving averages in an uptrend. That's the way I see the charts. SPX is a little weaker, but broad indexes look good, IMO. How is it not trading the charts ?

I was saying you are trading the positions because you are building them before the turn. Fair enough if you trade the expectations based on similar previous instances. Anyway, good luck!

[beta]

OGM, I appreciate your sharing this data. However, I dont quite agree with your interpretation of the prior two examples.

If you closely examine the first data point from July 2011, VIX RSI first climbed > 70 two days before the selling climax. From that point, SPX fell over 10% further.

Similarly, in the second data point, the VIX RSI got > 70 1-2 days before the daily bar that you have circled. Thus, one cannot conclude from the current example that the RSI has peaked here.

From your cited examples, I would argue that the markets could fall another 5-10% before hitting a selling climax.

Also, note that in your prior two examples, the VIX RSI selling climax came toward the END of a long decline (actually, the penultimate end, since another wave lower folllowed in both cases).

Here, the decline appears to be just getting started, so it's a different context. Not sure what this difference in context implies here. If anything, the VIX could be interpreted as a leading indicator of further price declines.

Ok, maybe its a bit of an exaggeration.

VIX daily RSI has spiked to 75. This has occurred only 14 times in the past 20 years and included some major lows. 10 times if you add a condition that VIX spikes over 22. I ran a quick strategy that says if you buy on a day like that, 80% chance to sell with a good profit 3 days later. The couple failures have occurred in 2001 and 2008. 2001 was just a couple days early, before a big rally started, and 2008 was a real failure.

This isn't even a once a year event.

At the same time the NYSE daily chart doesn't look that scary at all. Looks like a pullback to moving averages.

Actually the broadest Indexes.. NYSE and RUT look the best.

Notice the magnitude of the declines on the days VIX RSI broke 70 last couple times. I'm thinking the Fear is way overdone here.

Edited by beta, 30 December 2012 - 02:05 PM.

[ogm]

All I'm saying that there were only 14 cases in the past 20 years where VIX RSI has hit 75+. And only 10 cases where VIX was higher then 22 at that point. Some where at the end of the longer declines, some were not, if you can look up those charts. Sometimes its just a spike. Within 3 days you could've made money in 80% of those cases. 2008 was the only real failure. But I don't consider this situation similar to 2008 in any way.

Edited by ogm, 30 December 2012 - 02:39 PM.

[andiron]

are sentinels getting antsy?

[ogm]

For that matter there were only 36 cases in the past 20 years where VIX RSI spiked over 70, and you could've made money in 70% of those cases within 3 days. If you look at the chart in the 90s, there were plenty of times VIX has spiked with RSI over 70 on a minor pullback in the ongoing uptrend.

Edited by ogm, 30 December 2012 - 02:54 PM.

[beta]

For that matter there were only 36 cases in the past 20 years where VIX RSI spiked over 70, and you could've made money in 70% of those cases within 3 days. If you look at the chart in the 90s, there were plenty of times VIX has spiked with RSI over 70 on a minor pullback in the ongoing uptrend.

OK, I like the fact that you are putting forth a testable hypothesis.

I also accept your general proposition that VIX RSI spikes > 70 tend to closely precede a selling climax --in most but not all instances.

But, on weekly readings, VIX RSI has not yet reached the threshold accompanying major lows in prior instances. Also, I am highly doubtful that VIX has peaked at 23.

I am prepared to cover/buy SPX 1377 just like every other trader on the planet.

Question is, what happens after the anticipated bounce back to 1400-1420 -- ?

Edited by beta, 30 December 2012 - 06:06 PM.

[DrSP]

I don't have any stats. Mine is simple charting. And I am just following the trend here. It may seem illogical to follow the tail (VIX) and not the head (SPX or indices) but the head is also pointing down. Anyway, since the thread ia bout VIX, I am presenting a simple basing of this derivative and about the roar to begin.

What will happen tomorrow or this week? This chart may not tell you such things as what to do tomorrow as it is a weekly chart but on the weekly chart timeframe, the direction is clear until it is not. The market trend is down until it is not! If I was short volatility, I would bail out on any market rally. My 7 cents, adjusted to inflation.



The indicator is simple MACD. But, it clearly shows the momentum improving while the price is basing and waiting to go.