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[thoughtpwr]

The following article from the weekend discusses the lack of VIX insurance buying and shorting in the context of previous lows (2011). It ventures into one potential aspect being major players going to either cash or alternative investments over the last two months while the VIX has worked higher due to an accompanying lack of VIX call buying taking place during this period.

Schaeffer's Monday Morning Outlook

The discussion mentions the SPX 2000 level being a magnet for the index (Monday's action to come) and the subsequent unwinding of positions as part of the reason for higher prices that followed. This could play out as a repeat this week where we bounce out of the 2000-2015 area early in the week and then have a conventionally stronger OPEX. Data shared by Rogerdodger agrees with this Bernstein Seasonal Buy. Several have mentioned new highs at 2100 this week, which would fit that scenario if we are supported just above last week's lows. This would also be the third test of that area, which would put the pressure on the market to test the highs again. A third option is that the money is on the sidelines awaiting positive earnings reporting.

I was surprised by Burk's data showing how poorly the coming week has been, since it has some historical seasonally strong data from Bernstein stating a Buy starting at the close on 1/12-1/16 as well as a second between 1/12-1/18. That is a conflict, but I would expect support to show up at the wedge lower trend line this week in support of that case. If Mon decline is a low volume down day, with minimal new lows, that can support a rally turnaround.

In addition, oil futures this evening are testing the lows of last week. If they hold, it is likely to generate a rally next week to finish an ABC correction (minimum) off of the last low. That also supports a stock rally next week if that level holds.

If the SPX doesn't hold 2000, then 1970-1975 is tested and being OPEX, we might face delta hedging leading to the next big wave down. (I noticed Europe opens strong and SPX is up 7 at the moment, but I suspect it doesn't hold by the morning. We will see.)

A separate article on Alcoa reporting earnings Mon evening may be the "tell" on a bottom on Tues if a reversal of a down Mon could be produced by the AA earnings report. This market reaction could draw money into the market (which may be on the sidelines) and make next week a ride to new highs or higher. The significance of AA reporting (despite it not representing the market as a whole) is discussed in the following link:

Alcoa Reporting Significance

You will notice that it is a positive reaction to AA earnings, which could be read as a positive reaction to the beginning of earnings as opposed to AA specific earnings, since Tues has four more companies report as well as a flock of financial statistics are reported upon. Tuesday is probably the key day next week; is it Turnaround Tues or not? Also, if the market wedge is a diagonal triangle, and we hold 2000, the timing says we go to new highs next Fri/Mon as well in wave III. However, if we draw new money from the sidelines, then we could be headed to 2120 or higher for a higher level consolidation constituting a breakout to new highs.