I don’t have terribly much to say tonight as this tape is bouncing around like a Mexican Jumping Beans and needs to finally pick a direction. Seems each day we gap down and then reverse at least some of the lost territory by the end of the day. Of course this type of monkey business can only go on so long.
I have been talking about the VIX a lot lately and there’s a reason to my insanity. One – we the pattern itself has been interesting in that we keep gyrating higher and then suddenly ‘reset’ to the downside. Clearly there’s a buyer at 22 and seller at 18 (relative to equities of course) – and at some point a winner will establish itself – whether or not the bears or bulls will take the price here remains to be seen. My take thus far is that we’ll cross that bridge early in January.
Now – what’s even more interesting is that ‘volatility of volatility’ seems to be on the increase – as that means that we may be approaching a turning point on a medium to long term basis.
For my beloved subs I have a beautiful fractal tonight – feast your eyes on this beauty:
That’s right – the NYSE A/D ratio panel (in the middle in green) bestowed us with another Gothic Church Tower fractal. Which increases the odds for a continuation of the current correction to the downside. Now the reason why I italicized the odds is that this is not a guarantee that we’ll continue downward. But in the context of other supporting measures it suggests that an interim high has either recently been painted or is in the process of playing out. As you can see the last one worked like a charm and the one before that was only good for a little slide.
If you want my take on it (and since you’re here I guess you do): I’m lukewarm on this one – the tape seems to be all over the place and IMNSHO may be feigning weakness. Those magic dip buyers just keep showing up when you least want them – I pointed some of that out on the hourly Zero today (if you’re not a sub – do something about it). Plus it’s holiday season – yada-yada. I gave the bears Monday and maybe today to really yank the bull’s chains – thus far they have been producing some downside but nothing that couldn’t be sorted out by a juicy POMO auction. Thus, at best I see a slide to 1160 – maybe 1140 – unless I start seeing some really negative signals on the Zero.
The good news is that the DXY continues to rally. The bad news is that the DXY continues to rally (without equities properly following to the downside). Now, I did mention that equities may lag a rallying Dollar for weeks or even months – so let’s reserve final judgment until then. Relative to ole’ bucky specifically it’s however worthwhile considering that it closed right at its 50% fib mark today. Coincidence? I think not!
I expect it to make a run for the magic 80 mark – perhaps get as far as 80.5 (i.e. its 61.8% fib mark) and then get stomped on by our friends over at the Fed. And any downside or snap back here on the DXY may support a counter rally over in equities. Which is also why I don’t give the SPX much further than 1140 at best. Heck – I would love to be wrong on that one – believe me 😉
Happy Thanksgiving everyone!!