I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Monday, February 25, 2013

Feb 25

Crazy busy day, could not watch the market in real time. The 60-minute system issued a sell signal on 2/20 and that has stayed intact (and re-confirmed today ... boy howdy). But the Daily System also issued a sell signal today. However, since I could not send the signal out in real time, I will enter the signal at the open tomorrow. Just letting you know the situation.

Friday, February 15, 2013

Feb 15

I have watched and posted on long term VIX divergences (and the fact that there has not been any in this cyclical bull market) many times. [See here, and here, and here, etc.] This continues to be one of the reasons why I think this cyclical bull market is not over, nor are we near the top of it. Once we start seeing a VIX divergence of >several months (combined with other internal indicator divergences that I have discussed previously), then I think we would have a setup for a major top. But we have nothing even remotely of the sort now.

I have also posted about the fact that short term VIX divergences very often accompany the short term (Minor and Intermediate degree) pullbacks in this cyclical bull. Well, today the potential short term VIX divergence that had been building since the end of January has evaporated. See below. This rally still wants to continue. My guess has been to 1530, but maybe that should now be qualified with 'at least'. The prevailing sentiment seems to be 'we are going to get a pullback any day now' and rallies love to grind higher in that kind of short term sentiment. We'll see how the next couple of weeks play out, but I am certainly not going to be surprised by a slow drift higher.

Friday, February 8, 2013

Feb 8

This move looks like it was consolidation after all. My target of 1530 from last week is still in effect. We'll see if the market can muster a rally much beyond that on this wave (of which I have my doubts).

Thursday, February 7, 2013

Feb 7

I am seeing an interesting setup take place, which is the 'broadening top' (which is highly distorted and stylized at this point). The reason why I think this is a possible valid setup is because of some very interesting similarities to the short term peak in early 2010.

The early 2010 peak displayed a 'broadening top' for about a week in mid January 2010. The current churn and potential broadening top here has happened the last week of Jan/first week of Feb 2013. So the seasonal phasing is pretty good. We had a strong and very pronounced 3-wave move up from the previous November lows in both instances. And we have extremely similar long and short duration PPO movements on the 60-minute timeframe.

This is making me question if this could be a reversal pattern instead of consolidation which is what I had been thinking. However, we have a pretty good defined level now (see second chart below), and if we stay above that level then I still think the 1530 target is appropriate before the next significant correction. However, if we close below it, then I think the chances of a significant correction being in progress now becomes greatly increased.



Saturday, February 2, 2013

Feb 2

Based on how this wave is progressing, ~1530 still looks like a reasonable target.