Market did a contra trend rally as I expected from the 1300 psychology area (support) for the bulls. We got a nice 20 point rally from Thursday and Friday - but that was just a minor retrace after a bigger plunge last week. As I have been pointing out so far - a move up to 1320-1325 area is a brilliant shorting opportunity and still stand by that - still heavy short 1333-1330 SPX , but another "lower high" should be made with some new lower lows.
So what I expect form here is a possible , minor minor gap up before a plunge today - the area 1320-1325 should find heavy resistance and we should see another move below 1300 and near 1250-1270 sometimes this week.
As long SPX is below 1325 we wont have a buy signal and short term trend in markets is still down. But IF we see a big rally today above 1330 ( to confirm the rally ) we will go out with small profits or break even from inital entry, but until then the market trend is still down and no reason to fight it before markets showing strength it self. The volume were also quite low on the contratrend rally vs the volume when markets were moving down. But for some reason markets can have low volume and be grinding up for a long while as we have seen , so not sure.
But all in all - we should hear a lot more to US debt ceiling this week and the Eurozone Debt Crisis as the Irish people got a new government and want to renegotiate with the bailout package with EU. I'm thinking the most likely is a Irish Deffault like we saw in Iceland - and if Ireland deffault wont speak good for Spain - Greece and Portugal....
We have lots of economic data this week with many meetings regarding the valuta policy , so expect some violent moves in the currency markets. I think the dollar is about to rally bigtime from this trendline to 87 next and the euro/usd about to fall of a cliff(Possible with Ireland problems comming up).
We have still problems in the Mid East and if it spreads to Saudi Arabia watch out for oil a lot higher...
All in all - short term trend is down until we breakout above 1325 and possible with confirmation 1330. (Still believe correction started late February)
Good luck to all
Sqwii, can you please explain how you interpret VIX (in general) and why you think it's useful to chart it? thanks
ReplyDeleteHi Arno
ReplyDeleteSorry for the late response.
VIX is important cause it shows if there are fear in markets - and if there is no fear in markets - they wont sell off. By fear markets is able to sell off - thats why the breakout in VIX on weekly timeframes tell us that fear is getting into markets again and picking up. More fear = more accelerating sell offs should come.