1. neg divergence between the reading an an oscillator (i used the CCI here)... as marked on the chart...
2. since Sept... the VIX has confined itself to a parallel rising channel... and remains towards the top today... the top appears to be around 42-43ish
as the QQQ's (and others) are working out would appears to be a falling wedge pattern (which statistically is a reversal pattern)... we have yet to see a higher Vix reading then that of 1/22/07, and the CCI is reaching a high reading (yet still slightly below the 1/22 CCI high)... so...
if the overall formation IS to continue... we'll need to see a nice rally here over the next 3 days, past FOMC and into opex... taking the VIX lower and preventing any oscillator (i.e. the CCI) from increasing any more... this would set the stage for a late MARCH sell off... rocket the VIX up to greater than or equal to the 1/22 reading... and allowing the oscillators to record a lower low than in January... setting up a true negative divergence... and possibly marking a climatic bottom... maybe even a good IT bottom... so to sum it up... if this is it...
1. rally into FOMC tomorrow... and possibly through to opex
2. sell off
3. climatic low (may not need be a lower low) ---> maybe a news related towards the end of the week to mid next week (they'll probabaly pick the weekend though)
4. neg divergences in the VIX/oscillators... clearly pointing to a good, reliable bottom... in the last week of MARCH...
btw... i'm long apr 45 puts and still scaling in...
A Simple Chart...
http://stockcharts.com/c-sc/sc?s=$VIX&p=D&yr=1&mn=0&dy=0&i=p52998551934&a=133461914&r=1531.png
Edited by TheArchitect, 17 March 2008 - 05:49 PM.
