Market update

Previous market update here

The market was on a sell signal from the previous update. After 8 sessions, yet, the market is at the same point (SPX as barometer). However, we have not gotten a buy signal. For this swing trade (next few days), the signal is still on a sell. The market should see lower prices. This call is only for the IT/ Intermediate term.

Could this be the end of the bull market? May be an initiation. We have stops for the long term market charts much lower, so we cannot call this a sell signal on the long term yet. But, we will see higher prices and this swing trade is a buy the dip. My common sense indicators suggest that this will be a buy on the dip. One of the stocks that is an example of this raging bull market is NFLX. NFLX is near its all time highs. Bull markets don't end when the leaders are hitting all time highs. We will take note when the change happens. 

Market update

Previous market update here

 

VST/ ST - New buy signal

 IT/ LT/ VLT - Buy

 

Previous sell signal was a fail = This ST/ VST updates could be chop and top/ drop. Trading portfolio is getting chopped. But, IT remained a buy signal through out, so we are better in that account.

 

Except internals (Breadth and other liquidity indicators), everything in the externals are firm including price structure. Breadth has been bad for the last 2 months, indicating topping. In 2007-2008, it took 3 months for the price to realize bad breadth. But, in 1998 - 2000, it took 2 years for the market to eventually top. Bad breadth continued to push the market higher from 1998 to 2000. So, there is no telling if the market will top tomorrow or in 2 years. Our barometer has not given a signal either, so wait for IT change in stucture, not yet at least!

 

Internals are obviously bad, so be prudent; Be flexible; Signals may fail, signals may be profitable but be advised to be change your mind at the hint of change in direction.

 

 

 

 



Market update

VST/ ST/ IT - Turned to sell as of close yesterday

LT/ VLT - Buy

 

 

We can use today morning's bullishness to sell short SPX. Previous market update here

Market update

VST/ST - Sell

IT - Turned to Sell at close yesterday

LT/ VLT - Buy

Previous update here



Market update

VST/ ST - Turned to buy

IT/ LT/ VLT - Remain on buy

Did not get anything out of the previous VST/ ST Buy

No change in the Gold update.....

Using moving average cross-overs for $VIX

It was widely expected that the removal of uncertainity after the presidential elections will move the $VIX sharply down. After the elections, $VIX didn't fall. $VIX has been very stubborn, in fact. The results of the elections met with market sell off. $VIX has been building a good base around the 14 - 15 area. Everytime $VIX made to that area, it rebounded upwards. Though $VIX hasn't moved much upwards, the key moving averages are crossed over making life further difficult for the risk-on market investing. I am using a short term moving average, 21 EMA and a long term moving average 89 EMA in this case. I have circled previous areas of  21 EMA crossing 89 EMA up. In those instances, results were not encouraging for the broad market. I would wait for the cross down of the same moving averages to put money to risk again. The market is there in the long run, we don't have to participate in the market every single day to make money in the long run. My suggestion is to stay in cash until the next opportunity comes our way. The chart is useful for intermediate term investors.

Volatility index

Currently, Spot VIX is priced at 31.81 as you can see from the above graph, as of close today. August VIX contracts are trading at 31.45, understandably so! August VIX expires on 08/17 morning. You can clearly see there is a ~ 5 difference between August VIX (Q1) and September VIX (labeled Q2). Spot VIX will be closer to the current month contracts and the market will be trading September VIX contracts from 08/17 as Spot VIX. Because of the difference in 2 contracts, VIX moves here can be quite volatile. Either the August contracts have to trade below to take the price closer to September contracts or Sept. contracts will move closer to Aug.  contract. VIX momentum for the last 3 days has been to the downside.