19 replies to this topic

[BWTrader]

Just heard on the Creamy Butter Nut Channel that the last time vix broke 30 a 6% rally ensued.

BW

, I think we will see a range for the rest of the month So, I expect the 890s to be revisited at a minimum in the days ahead.

[IYB]

My preliminary thoughts are these:

1. Having thoroughly reviewed the deteriorating internals of this market via divergences over preceding weeks, I continue to firmly believe that a downturn is at hand, and that the Seven Sentinels have correctly identified that change in trend from up to down. External follows internal, and internals have turned down. Externals will follow.

2. In this decade, there have been a handful of times (three that I could find) when the SS's gave a sell signal, followed by a market decline, and then a rebound to nominal new highs, and then another SS Sell Signal was produced off that nominal new high. Upon that second signal, then market's retreat accelerated and the new IT downtrend was confirmed.

3. I am inclined to expect the same here, but will not make my final decision on that today. If we get a new high and a new SSSS, I'll definately act on that signal in a very aggressive way. But it is still possible that my study will turn up other options, caveats or considerations. More later.

Below is one such example of what I am describing from one year ago, May 2008, followed by the chart to May 2009 for comparison.
http://stockcharts.com/c-sc/sc?s=$SPX&p=D&st=2007-12-31&en=2008-07-01&i=p34726773653&a=163219808&r=5741.png
http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=6&dy=0&i=p34726773653&a=168196123&r=629.png

[IYB]

Below are the {blowup versions of} daily MACD, then and now, for comparison. The real key to this, though, is the breakdown of NAMO and NYMO below zero, and the hooking down as a result, of NASI and NYSI. Those define the overall trend as having turned down. Haven't got time right now to post those charts.....

http://stockcharts.com/c-sc/sc?s=$SPX&p=D&st=2007-12-31&en=2008-05-20&i=p56688037513&a=168387199&r=3596.png
http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=6&dy=0&i=p36311085114&a=168196122&r=3964.png

Edited by IYB, 18 May 2009 - 07:40 PM.

[thespookyone]

I'm with you, Don. I'm a simple guy, and I am not all knowing-I DO know breadth leads price. I shorted SPY at 90.62 today via puts, and am a tad underwater, but not yet blinking. The SPX did nothing more than backtest the breakdown of the wedge, the NYSE MCO tested the zero line from the bottom, and summation continued to drop on every index I looked at despite todays breadth on what looked like a low trin, low volume squeeze. My options have a month, I think if the market has anything it's much less time, and not much space-think I'll stand pat here a bit.

[arbman]

I think this parody continues until early June, if the Fed insists in inflating until the middle of June, it crashes at the end of the June. TNX, NDX, DJI all confirm. I think Fed will go nuts at this stage and they will push the markets to extreme and we are going to crash again around the last week of June from the middle of June...

[inamosa]

Agreed spooky I got stopped out of my short position today with a very minor profit - that was first started back on May 5 or thereabouts I left a very small position going To me this is a head fake and, as IYB rightly notes, price will follow the internals eventually...they cannot diverge for long I will jump back on the short side soon, I'm sure, but am being extra cautious with this abnormal market we're seeing There will be enough money to be made on IT downswing that I can afford to be cautious here I'd be very surprised if SPX 931 cash is exceeded at all by any significant measure

Edited by alysomji, 18 May 2009 - 09:33 PM.

[VolPivots]

Below are the {blowup versions of} daily MACD, then and now, for comparison. The real key to this, though, is the breakdown of NAMO and NYMO below zero, and the hooking down as a result, of NASI and NYSI. Those define the overall trend as having turned down. Haven't got time right now to post those charts.....

Here ya go D, one from the recent arsenal

And Arbman, great stuph as usual!

Attached Thumbnails

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[rkd80]

I am not sure what the hubbab is all about today? Nothing happened! Today was just a stronger than expected day, but as of now all the IT sell signals are still in effect. Today also brought all the nutty bulls out of the woodwork, once again - nothing unusual. SPX testing its broken channel on the dailies and unless something significant happens, today was just a pause in the trend change. Not sure what all the fuss is about..

[inamosa]

I am not sure what the hubbab is all about today? Nothing happened! Today was just a stronger than expected day, but as of now all the IT sell signals are still in effect. Today also brought all the nutty bulls out of the woodwork, once again - nothing unusual.

SPX testing its broken channel on the dailies and unless something significant happens, today was just a pause in the trend change.

Not sure what all the fuss is about..

Hubbab is about getting stopped out of an IT short. Hate when that happens and wasn't expecting it. Only positive is that an insignificant amount of money was still made.

Otherwise, you're correct about the IT sell still being on - which is why I still am maintaining a smaller short position.

The rarity of getting stopped out on an IT short that was already up solidly is what leaves me a bit more cautious right now than normal. Like IYB, I'll be rummaging things over the next few days but will ultimately be looking for a second high to go short off of.

It's possible we will even retest 930 SPX cash or go slightly above it before trending down on a multi-week basis as expected. Cannot dismiss it.

Edited by alysomji, 18 May 2009 - 11:03 PM.

[OEXCHAOS]

FWIW, this thing looked so much like it wanted to roll over that a short FELT good. I decided that they needed to prove it to me (been here before after a big run into the (allegedly) seasonally weak period). I figured I was on the right track when only ONE WSS surveyee was Bullish. Now, it gets tricky. Mark