Conflicted

Things are getting more tricky again on the equities side. If you followed along in the comment section during yesterday’s session then you know that I took out a long position courtesy of our famed Zero indicator, which stepped up the occasion and cut through all the noise as usual. This morning the main question for me was whether to hold long or to exit and consider taking out a short position.

Before deciding I consulted a stack of momo charts as well as reviewed other market verticals to get a better sense of this current market phase. Suffice to say technical evidence is conflicting at best but I’ll share it anyway.

Let’s start with implied volatility. The IVTS is creeping higher and proposes a similar situation we faced earlier this spring. I don’t want to assume for a moment however that this is a necessity.

SPX:VIX has been dragging the entire time and it continued to do it during yesterday’s reversal.

You may remember the two VIX sub components, the VIN vs. the VIF. Still elevated, and yes it is comparable to what we saw in Marc/April of this year.

LIBOR vs. the VIX – one of my more exotic ratios. It’s worked well in the past but failed last time – as anticipated actually if you recall. The BB was just to blown out for a good reading.

TED vs. VIX of course in a similar situation. Again I am trying to draw parallels to prior occurrences. What’s worrisome here is that it’s actually flashing a sell signal. I have not followed them in the past and would have to compile an exclusive chart for a better perspective. For now however it’s disconcerting.

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