Hiatus Just Unavoidable
I just simply cannot avoid missing a few days here right now, with all of my animal problems I barely even have time to trade. I spent the whole day yesterdays in vets offices for different things. I will do the best I can to continue to put things up daily but may miss a few days. The good news is I have not missed much. Alot of markets are chopping sideways in narrow ranges. Maybe tomorrows NFP report will break a few things loose. We are right into a sell zone right now for Stocks and I will demonstrate why I think that below.
Of all the different angles to examine stock price movement that I have studied over the years, the VIX in my opinion is the best individual tool to use. Just like anything else, alot of people now watch this so how to best use it is a constantly changing project. I like to run indicators on it just like it is an individual commodity or stock. It also can be traded as such, so if you desire you can trade this just like anything else.
The overall idea here is that since this is a volatility measure, it in general it will trade opposite of stocks. Of course like anything else there are exceptions, but that is the general view, buys here are sells in stocks and vice versa. If you look to the far left of the screen, you see a situation similar to what we have today. The green line overlayed on the chart is the SP 500. You can see the last time we had this setup, a decline marked by the red arrow occurred. What we had at this prior time was the RSI of the Vix showing a very oversold condition, which was also accompanied by the momentum oscillator in the next pane crossing it's trendline. Both of of these are buy signals, sells in stocks. We were also at that time right at the deviation bands meaning that a reversion to the mean should occur with pretty high probability.
As you can see the VIX did go up sharply, and stocks declined. Now forward to today and we see literally the identical situation. The only negative for this that I can see, is we now have light volume again, and an obvious overnight PPT move that saved a rollover last night. This is always the challenge nowadays is on sell signals you are often trading against the US government. As I have stated before, when volume is light it is very hard to trade against the PPT. When we get heavier volume they can be overpowered. These heavy volume days so seem to come out of the blue but they generally happen when 10, 14, 20 day lows get taken out. Funds often buy and sell at these places, so volume can show up quickly when these price areas get penetrated.
I am looking for sells right now as long as this setup remains. Will the PPT steamroll me, perhaps! This does also occur at a time that I have often previously stated on a bigger picture basis, where long term down cycles are about here. This could be a big move down if it gets started due to the convergence of both a short term sell signal, and a longer term one together.