:: actio-et-reactio ::
amg's market charts and blather
I finally got with the program and redid the SPX price relative to VIX chart using the "new" VIX, VXN. Much hand wringing regarding VXN being so low. This chart puts "low" in perspective.
You can see that SPX/VXN has entered 'new' territory. As long as Price-Rel-VXN holds above the MA, the bull remains in charge. A divergence may signal a reversal.
This SPX/VXN study came about because VXN wasn't on its own consistent enough to follow the VXN is low, time to go; VXN is high, time to buy' thing. I noticed a few things:
(1)The ratio SPX price relative to VXN channels (lower pane)
(2)Significant channel shifts happen when price is trending up or down
(3)SPX/VXN reversals are good swing indicators, regardless of channel position
(4)'Significant' tops & bottoms are accompanied by channel shifts.
(5)The direction of the 34d, 60d MA (Bollinger Band basis) needs to shift as well to make the SPX/VXN reversals significant. 
From the vault: the monthly CLOSE chart (#1c below). It shows plausibility for a move to 1115. HOWEVER, negative divergences (RSI -Reversal and ROC weakening) indicate thin ice. As bullish as the 'breakout' from the weekly wedge may look, and it may indeed tag 1100 before a larger correction, a better (ie, longer term) bullish move will come from some sort of a pullback FIRST, which may not come until just after the start of 2004.
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I've been schvitzing that time was running out on the weekly fork...it either had to exit the bullish projection or DO something. This week, assuming today ends positive, it finally made a move.
The Yellow bisect is a "Schiff". I added the faint grey bisect as I often see a "relationship" between the 1st & 2nd bottom on such powerful pivot reversals.
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Ensign has added reaction lines to their Andrews tool. Here are a couple, the current 135m ES and the 550 Tick (intraday) from day before yesterday, which was the first time I "test drove" the tool. As they project forward IN TIME, it augments the already-there "time" feature of the bisect. They aren't always perfect, but when they are...
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But its the bears who have been schvitzin'!
Please click the "stockcharts.com" link on the right.
Climbing the wall of worry, which fuels short covering and discourages selling. Couple that with the jolly seasonal aspects, you get the rally. Today the overnight futures high from the Saddam capture got tagged, very tidy. The rebound has been a peppy one and may have a bit more to go. The 60m chart showing resistance, but the daily and weekly still show room to run to 1106.
So what about the trouble? (1) Big caps getting action (Chart 2a: OEX vs. SPX) (2) Small Cap Growth/Value ratio (Chart 2d) running in its channel (backed off the selling a bit) (4) the daily 'expando' was a continuation!! This week completes Options Expiration/Triple Witching, having burned a few bears in the process, and as commented, fading the momentum going into OE', ie, buying the dip proved to be the 'right' thing to do. Keep an open mind!
The move towards big caps out of small caps is a sign of 'liquidity safety', mildly bearish (esp. for small caps). Seasonal strength lends support, ie, the fear of the strong season may be what's keeping aggressive shorting at bay.
Reit: This may be part of a complex topping, but yet another rebound isn't out of the picture, albeit looking weak at this point. Please review the weekly and monthly charts, both indicate 'time is running out', ie, price has not yet accelerated within the forks and may moving out of them, most likely as a consolidation prior to the next move, be it up or down.
1 Nov: Bullish outcome targets 1050, 1065, and 1106 . 5 Dec: Note that 1068 is the All Time High to recent low 38%; 1089 targets the 78.6%. Keep in mind the 'handy' MACD rule of thumb: above zero bias long, below zero bias short, higher time frames control.
Today's Updated 60m chart.
That's the trouble with successful calls, the odds begin to stack against making another one, esp. since I've been on a roll for a while here. Even so, I'm seeing trouble:
(1) Big caps getting action (Chart 2a: OEX vs. SPX)
(2) Small Cap Growth/Value ratio (Chart 2d) continues to curl up
(3) a small stochastic back-kiss (more like a kink) on the daily.
(4) an "expando" looking shape of the last 6 days on that daily, indicating internal instability. expando: successive higher highs, lower lows.
The move towards big caps out of small caps is a sign of 'liquidity safety', a mildly bearish sign. Seasonal strength lends support, ie, the fear of the strong season may be what's keeping aggressive shorting at bay. Oh, by the way, next week is Options Expiration/Triple Witching, so 'anything can happen', and more often than not it will be 'fade the momentum going into OE', ie, it could well dip enough to excite the bears, only to then reverse yet again into 1060-1090 territory next week. Keep an open mind!
Shown below is today's 60min chart, which shows the +RSI Reversal being fulfilled. It targets 1075.4, but there are reasons to suspect 1071 may be all it yields:
(1) CCI entered overbot (not bearish yet, but did it too quickly;
(2) MACD is reversing, but sub-zero (can be a weak bullish signal)
(3) Relatively low participation in the bullish move suggests it may not be sustainable.
FOMC meets tomorrow with minutes released on Thursday, both of which may be a sufficient catalyst for some more selling. This is a speculative scenario, so as always, it's best to watch what price DOES not what one thinks.
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The pullback, after having *made new highs* (relative, of course, to recent performance) looks like the beginning of something big...but what? May be part of a complex topping, but there are signs of at least a rebound here (60 minute chart).
Please review the weekly and monthly charts, both of which indicate 'time is running out', ie, price has not yet accelerated within the forks and stands the chance of moving out of them, most likely as a consolidation prior to the next move, be it up or down.
The Growth/Value ratio chart continues in its channel. With the recent downturn in the Small Caps, the ratio is curling up, indicating a move back into the 'liquidity safety' of big caps. This counts as a bearish indicator, but is not a load-up-the-shorts-truck signal. This ratio has been a harbinger of broader market direction. Note that it is a weekly chart.
1 Nov: Bullish outcome targets 1050, 1065, and 1106 (on *monthly*, change from 1138). 5 Dec: Note that 1068 is the All Time High to recent low 38% retracement (see the monthly chart).
Keep in mind the 'handy' rule of thumb: Watch MACD. When above the zero line, bias is long, below zero, bias short. Hopefully this has helped some folks using the daily chart from shorting too early. It gave a buy signal (as shown on the chart), but with considerable intraday volatility.
135m chart ES ::: Daily SPX ::: 65m SPX ::: Weekly SPX
|
moon phases |
At last, over the rim
of the waiting earth
the moon lifted with
slow majesty
till it swung clear of the horizon and rode off,
free of moorings
- Kenneth Grahame,
The Wind in the Willows
blather: nonsensical talk.
At times my analysis log, at times sharing what I've learned. Always my own work and views.
Content: amg
Basis: glish & bluerobot
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