Saturday, August 15, 2015

Charts 08-14: More rally, please, yes

With the huge hammer reversal off the lows this week, we may finally have our setup for that last touch of the upper daily Bollinger SPX and a hard breakdown of the indexes.

The tape counts reasonably well on the S&P 500, so I'd like to see us back up at 2134 by August opex this Friday.  The bottom is there, so is the new channel (for now).

SPX 08-14

Here is the initial breakdown to support at 1820.  Extrapolating the 50 and 200 looks like the death-cross on the SPX arrives around the start of September.  Super!

SPX 08-14 1Y

And of course the VIX forms a decent mirror-image of the SPX, grinding lower in its own ending-diagonal.  A sub-10 VIX in two weeks would be a gift from God for market skeptics and aspiring index shorts.  I do think the next GDP print on 8/27 will be very important.

VIX 08-14 1Y

Yes, that's a 1-2 move I'm expecting on the VIX.  The "W3" from that should be pretty amazing.

Hang in there.  Respect reversal candles like the hammer this week.  Be patient, stay in school, and don't smoke crack -- it's a ghetto drug.  (With election season warming up, it's time to see the fine "Bob Roberts" movie again soon.)


Permabear Doomster said...

Been hearing about new highs since mid May.

Weekly/monthly cycles argue against such renewed strength.

Hell, just battling to 2110/20s will be tough across the next week or two.

If we do battle higher into late August, I'll just add

*VIX mid/upper 20s... probable.

Christian Gustafson said...

Yup, Doomie, and we still haven't smacked that Bollinger. We have flirted with it, but could not reach it.

But the bears can't point at the current tape and call it impulsive. They're still waiting, waiting.

So my point is, if we're going to go up and ring that bell, the reversal from last week gives us some reason to believe it can finally be done in the short-term.

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