Things that make you go hmmmmm, and this mkt. is making me go hmmmm. Here I was calling for this to be the catalyst week, and it could not be any flatter. This would be a great week to selling options, not buying them. The time decay would be working greatly to our benefit. There is not much to say, we are still waiting for “the drop” and the decreasing v and indecision, I think, are working towards that direction. Let’s look at a couple charts and see if we can clear things up.
The VIX was actually down over 5%, but our latest support held strong. This is bullish for the mkt. But if you look at the chart, is it not consolidating? I think so.
7 days, it has been 7 trading days that we have worked the 943 line. We are either going to bust above it with conviction, or drop like a rock, and you know my opinion. I looked back 20 years on the SPX daily chart for a similar formation. I could not find one. I found plenty with 4 or 5 or 7 of 10 days touching a strong support or resistance line. Each time I found one, it was followed by a significant reversal, either way. This has confirmed my belief and with each day like this, I think the ensuing drop will be faster and fleeter. If you can find a similar set up, please let me know, I would love to study it a little.
This is the Russell 2k on a 60 min. chart. What I see here is a possible head and shoulders forming. There is also some support at 515, that if breached will lead to a significant drop.
I wanted to look quickly at financials because for some odd reason they seem t have strength. I thought the news of the bank pay backs today would lead to a pretty good up move in the XLF, it did not happen. Instead this thing is bumping its head against some stiff resistance with a pretty significant v decline. It truly looks bearish to me.
Finally, as CASH21 pointed out to me the Eur/Usd is forming a great head and shoulders pattern, with the 200ma coming into play. His theory is that once the Euro fails, it will take our mkt. with us. This makes sense because as the dollar strengthens, it weakens a lot of our mkt., especially the XLE.
In closing: I think we are still in for a drop, and it is as simple as that. AKOT
