If the 200 day average does not hold on the VIX, it will signal a major shift in sentiment. February of 2007 was the last time the VIX traded beneath this average for more than a few days.Â
My personal opinion is that the VIX will absolutely not trade beneath this average for a sustained period of time, but my opinion is biased to the bear side, even though I am net long in my positions.
The Dow Jones closed at 12684.92, just beneath the 50 day average of 12688.03. RSI(2) for the DJI is 92.28, which is consistent with previous short-term tops.
This setup looks like a humongous bull trap.
But, it could be the beginning of a significant rally.
A rally with no legs. but, looking at the trinq, it may have a bit more to go before going short. Asian market is running hard as of this typing.
http://stockcharts.com/h-sc/ui?s=$TRINQ&p=D&yr=0&mn=4&dy=0&id=p78850526276
richard
Woody, you’re coming through with some quality content, keep it up.
Great post. You seem like an intelligent investor. I like to use VIX extremes to signal market reversals, and thus entry points. Vix at 20-21 is a short, at 35 is a buy.
Instead of viewing the resistances of the Dow (notice how it’s struggling with 12,700), I’m using key resistance points in some of the Dow’s components.
Lately, the Dow has been well orchestrated to ignite a rally. It’s convenient to kick out flat stocks, and inject beat up financial stocks just before their bounce. The following stocks have led the relief rally, but are now approaching key resistance levels that will send them back down:
BAC (44.80 tough roof), INTC (shut down at 45), HPQ (shut down at 50), IBM (115 monster resistance), MMM (at 55)
And these stocks will have the hardest time recovering: GM, BAC.
WMT has been the only component that has been breaking out nicely, but we all know, money flowing into WMT means big boys heading for conservation. After all, the rise in stocks like WMT and the simultaneous fall in our previous leaders (GOOG, MA, RIMM, GRMN, AAPL, VMW, BIDU) tells me institutional investors are switching positions.
… when those resistance levels slap these relatively low volume Dow stocks down, we’ll get our next sell off.
-gio
Thanks for reading folks.
Richard, is there a place I can go to for a short primer on the trinq?
Gio, good stuff. Used to be you could use GOOG, AAPL, and BKX for the Nasdaq. Tom2oc used those well. I’ll have to check out the names you mention today.
Woody:
TRINQ primers:
http://www.esignallearning.com/education/marketmaster/kcalhoun/default.asp
http://www.thestreet.com/funds/managerstoolbox/10037531.html
Keep up the great job.
Ooops. I meant INTC at 22. How’d i get 45? LoL!
Zen, thanks for the primer. It looks like the TRINQ went lower today, so that would be bullish, right?
we can look at trin (broader market) or trinq (naz). the trinq seems to be working great since the summer of last year.
the 20day moving average is 1.05 today (bullish). but, it was much higher yesterday. i don’t know remember what it was yesterday. but, higher. so the moving average direction is down. market is going up. Not bullish to me because market is moving toward the point of being overbought.
this trinq from stockchart can be expanded to a longer period of time up to 3 plus 1/2 year?
http://stockcharts.com/h-sc/ui
i am not an expert. but, i also use askresearch.com
http://139.142.147.19/StockChart_ImageOnly.dll?cus=0&co=ask&i_chart=0&inm=5&ind=2&idx_sym=&sb=COMPX.X&cn=us&size=1&ind2=-24&inm2=-1&ty=2&sca=1&chk_mov=on&mov1=20&mov2=50&mov3=200&boll=0&chk_lin=on&lin=252&rsi=8&chk_sto=on&sto1=15&sto2=5&sto3=5&wil=12&chk_macd=on&macd1=12&macd2=25&macd3=9&roc1=16&roc2=8&mfi=14&rsc_sym=&ref_rate=180
the low was when trinq at 1.45 (this past mid january 2008 & august of 2006). high trinq means the market sold off enough, it’s time to buy. dummy me or cowardly me only play stupid etf, stupid qqq, stupid qid, stupid qld, stupid broader made little to no coins in recent months.
On the other hand, as the market move higher, trinq goes lower. when it gets lower than .935 (green line), it looks safe to enter shorts.
the above writeup is my personal / b.s. understanding. looking at the meager growth of my account from last year to this year, i am convinced that i know nothing. I need to steal fly’s broken time machine. it may be broken but it may still bank this internet leech a bit more coins than my near sighted, geeky somethin’ of a machine 🙁
conclusion:
I think, given that the naz has not really move anywhere, the market is posed to go lower.
don’t take my advice or personal bias. you ain’t going to bank any coins.
richard
sorry, i did not do spell check or grammer check at all.
This guy BILL DONOGHUE wrote the below article and another one about commodities in recent month.
looking to get a bit more exposed in commodity stuffs and other non-dollar related currencies after a pullback. Can you keep an eagle eye (one eye or a set of eyes) out for me?
thanks.
http://www.marketwatch.com/news/story/foreign-currencies-passport-better-returns/story.aspx?guid=%7B8AE6B00F%2DC9A2%2D48C9%2DA2F8%2D24F5D6C3127C%7D&dist=morenews
notice that one of my post seems to be missing. hope that i did not post anything offensive. if so, i apologize.
thanks.
richard
Richard, no worries. WordPress will hold a comment for moderation if it has more than a couple of links in it. I couldn’t get a chance at work today to approve the comment. I approved it…Now, If I can find some time tonight to read and digest it..Thanks for the info, I really appreciate it.
Here is one more link that you may want to look at:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1399335
also, for the trinq link, when i adjusted the chart attributes (year/month/days)yesterday, it went bad. don’t know why: you may need to do it on your end.
notice that that the trinq’s moving average is up today as a result of the selloff. we should be heading down (short term???) if you check the other site out. So, if the market recovers a bit today, i am going to get into some short etf at the end of the day (let me try twm this time a round: i am still piss at myself for not going with the dow on the uptrend. as for the qld and qid, don’t know what is going on).
i like the regression lines that the above site offers (id 1399335). the chart that i use at askresearch also give you the opportunity to do regression lines so you get a better sense of risk or capital management. I usually make money at the regression lines whether at the top or at the bottom. As for the in between, i have nothing to brag about. I am a dummy 🙂
i think i’m aweful when it comes to setting a time to sell or to buy. i always end up labling myself as being a “pig.” yeah, i work fulltime but it’s no excuse to not set sell point. Just got to figure out when to cut and run. 🙁
gld is killing me: I am looking to go long on it.
it’s so strong. tension in mid east or rate cut????? no pullbuck????? dang!
richard
well, at least, my qid is finally paying off a bit. miss 2/3 of the twm trade. monday should be a bounce day. wow: wipe out friday or zero sum game for the entire week?
we will see how this “in between” twm trade works out.
richard
as a devout member of the “bear club for men” im definitely in the bull trap camp……..but if this continues im going to have to start reading IBD and buying breakouts again—at least its a lazy and painless way to make money :o)