Could It Be A Train?

On Monday, in response to my previous post, one of my intrepid readers (bankwalker) asked tongue-in-cheek as to whether that light at the end of the tunnel may have been a train. Which was pretty funny but his quip suddenly took on a more serious dimension during yesterday’s session when one red candle in the SPX started chasing the next one.

Right after the early morning spike our trusted Zero indicator left little doubt to as to where we would be heading. I am now seeing a negative signal on all three time intervals.

On Monday I posted this histogram for week #40 in my subscriber section. On average this week is a coin toss with a small bias toward a bullish close. But as you can see from the histogram when things go wrong they can go really really wrong.

As of right now we are still in the 1-stdev goldilocks zone above -4% but be advised that there is precedent of a potential wipe out in terms of seasonality.

The DVOL panel shows consistent selling pressure right after the open – clearly preceding the devastating ISM report. So quite possibly someone somewhere got positioned ahead of time.

On the SPX the day closed 43 handles down which is only shy 3 handles of the expected move of 46 handles priced last Friday on options expiring this week. So it’s fair to say that market expectation and sentiment were rattled yesterday.

On the VIX we are almost guaranteed to open > the 20 mark today, unless of course Powell comes out and …. oh well … never mind that …. let’s hope Powell keeps his mouth shut 😉

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