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Pray For Confirmation

Pray For Confirmation

by The MoleOctober 13, 2010

Alright, you bears asked for a glimmer of hope and tonight I finally can deliver something. But you better start praying to your favorite deity right now.

That’s right, start praying for confirmation tomorrow (not Friday or Monday) – because without it you bears are looking at a pretty meager X-Mas this season. Pass the dry bread please!

I left half an hour before the market closed today and at that time Mr. VIX was still below yesterday’s close. But I just checked and it seems that we indeed closed back inside that 2.0 BB. Now, as some of you remember, this close inside represents a 2nd step toward an equities sell signal (or VIX buy).

For the noobs – here are the rules:

For a $VIX confirmed signal you need 3 events:

  1. A close outside of the 2.0 Bollinger Band (20-day SMA) – check!
  2. A close back inside the 2.0 BB – this issues the signal – check!
  3. A higher close (sell) or lower close (buy) than the close of the day back inside the 2.0 BB – this confirms the signal.

So we still need a higher close for confirmation. Without confirmation no cookies – let’s be clear on that. That doesn’t mean the tape can’t go lower but the ‘odds’ are not as good – simple.

You all know I have become quite cautious when it comes to predicting bearish tape, especially since the daily Zero has been flat as a flounder as of late. But that does not mean I will dismiss any bearish evidence I come across. If we get confirmation tomorrow it will bestow an opportunity for the shorts – whether or not they can turn this into a meaningful correction with a dozen POMOs scheduled ahead of the midterm elections is of course another story.

See you on the other side – let’s hope we’ll see some fireworks tomorrow.



P.S.: Anyone who asks me a dumb question about those VIX rules will be shot on the spot. Plus his/her entire family will be enslaved in a North Korean work camp. You have been warned.

About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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