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Wednesday, August 26, 2009

VIX Count

Continuing along the theme of canaries in the coal mine: I am taking a look at the VIX. Like with my sentiment charts of the CPC, CPCE, and BPSPX, we should see volatility make a low (confidence make a high) around the P2 top.

I had actually not updated my VIX counts for a couple of months and had only been watching it peripherally. Imagine my surprise when I looked at my chart and saw that it broke the long term down trend line, and on top of that, it is now using it as support!

Very ominous for the bulls. My count also already has a bottom in the VIX. And if you think about when that bottom was made, it was in the middle of the strongly trending part of Wave 3 of A. After that, there was been a lot of volatility. The absolute price has stayed in some bands and has been "stair-stepping" up, but there has been a lot of "chatter" in the bands.

I think this is another "X" on the P2 top checklist. So far we have:

- X -    VIX Low
- X -    BPSPX (and other bullish indicators) at higher highs than 2007 peak
- X -    CPC at uber-bullish levels
- X -    Investor Sentiment above 80%
- X -    Economists declaring "end of the recession"
- X -    Analysts upgrading everything
- X -    "Speculative Leader" indices showing weakness / bearish divergence
-    -    Clear end count for P2

.... And almost on that last one. Things are certainly in place

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