SPX - BOTTOM ?, VXO & BOP suggest NOT Options

[mss]

I know I'm going against the norm thinking here, but IMO, the bottom has not been confirmed yet. We might have a tradable bottom over a wide price range, but consolidation/correction is not yet over.
The charts below have notes that explain them.









Comments welcome,
mss

[SilentOne]

hi mss,

That was quick. Thanks for the timely post.

SPX - VXO thread

What your seeing there will also have implications for the PM sector. The general market and the PM sector are tied to the hip.

I guess trading it is the way to go at the moment.

cheers,

john

This post has been edited by SilentOne: Aug 18 2007, 01:24 PM

[Trend-Signals]

Hi MSS,

Good to see you. The recent price action is similar to 1997 as shown below.


Good luck




http://www.traders-talk.com/mb2/index.php?showtopic=75006


1997 Price Action Pattern:


I commented on VIX breakout in Jun-Jul 2006 bottom call that market is showing similar pattern of 1995.

The current price pattern shows that we are in 1997 pattern when market corrected 10% after a correction of 7%+/- which is Jun-Jul 2006 low.




In 1997, we didn't have a retest of the low after similar "W" formation with lower/low with 10 %+/- correction which is the VIX level 37 which we have seen. After 1997 10% correction, market rallied 60% before 1998 correction of 20%.

In 1998, after 1997 bottom followed by a rally to 60%, we had 20% +/- correction with higher VIX level to 47.

[underabigw]

MSS,

Great charts! I have a novice question. Does the 9 to 1 up volume on Friday have
any impact on your analysis that the correction might not be over yet?

Thanks.

[mss]

MSS,
Does the 9 to 1 up volume on Friday have
any impact on your analysis that the correction might not be over yet?

Thanks.

Sorry, I can not effectively answer that as I do not use daily ratios in relationship to the data presented.
I'll look into it when time permits, it's an interesting point. Thanks for asking.
mss

[underabigw]

MSS,

Thanks for the response. You do some really great work.

Thanks again.

[PorkLoin]

Underabigw: I have a novice question. Does the 9 to 1 up volume on Friday have any impact on your analysis that the correction might not be over yet?

I have not checked this over decades, for example, but my experience is that such lopsided volume usually leads to significant follow-through later. Some of that experience was learning the hard way in 2003.

Best,

Doug

[underabigw]

Porkloin,

Thanks for the reply. I agree that being on the wrong side of this type of volume
momentum can be costly. I have made this mistake before and I don't want to
make it again.

Thanks again for your input.

[SilentOne]

hi mss,

The near term looks iffy for general markets here. The good news for bulls is that the downtrend line was taken out today suggesting a cycle bottom, which could be confirmed with a successful retest of the lows in the coming days.

The bad news is that the $SPX is butting up against heavy resistance at 1475 -1485. What lies at this level besides obvious price resistance? 1485 is the 61.8% retrace of the July-August decline. The upper bollinger will be capping that level in the next few days. The 50 dma is just above this level as well and declining. The Stoch is now overbought and the RSI has yet to climb back up over the 50 level.



I am being very cautious (read trading only).

cheers,

john

This post has been edited by SilentOne: Aug 23 2007, 11:48 AM