WILL HISTORY REPEAT ITSELF?

I would like to have someone tell me what the difference between these two graphs is? The one hint I will give is that the first one has more data so it shows what happened after the fact of the pattern development I have indicated. You can see they both have 4 higher lows in the blue line. In the first chart you can see that the price ultimately zoomed higher, whereas in the second one the price direction after the pattern formation is not displayed. I would challenge anyone to tell me there is any difference at all in these two "looks."

Now I will reveal what this is

You can see now that this is a chart of the VIX with the SP 500 overlayed in Green on it from 2004. This is the last time we had a 4 point divergence in my indicator and as you can see the VIX zoomed upward and stock prices came down hard. If we now go to the next chart, you will see why I named today's post what I did.

We don't know what will happen next but the similarity between these two charts is uncanny to me. In the 2004 example the decline was sharp, lasted about 3 weeks, then reversed back up again. This would allow us if it were to play out the same way, to buy stocks at lower prices for a continued bull run. Of course we have no way of knowing whether or not this will happen, but volatility has generally been a good way to track stock price direction. I do not as of this moment have a sell signal in the SP 500. I had one this week I took that I got stopped out on. I am leery of shorting this market, I have been burned doing so recently. However, I have to honor my signals, and my general tools tell me to look for short term sells in my indicators, so that is what I am doing.

Here is one trade I made this week that more than made up for alot of my dumb ass moves in the stock market, just so that readers don't think I am a complete imbecile.

I had 10 contracts on this long trade in the Dollar Index that made about 12k, so it made me whole and then some over the losing ES trade. I suppose I should still be long but sometimes when I have a couple of bad trades and get a good one that more than covers them, I like to ring the register and re-group. Also, these holiday trading days in the currencies get very strange sometimes. They have often had big one day moves that completely reverse the very next day.

Let's see what next week brings, but as per what I have shown here, I am looking for weakness in stocks. I am also looking for a long side entry in bonds which I will cover if I wind up finding my way into that trade.