- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
- CHARTISTS MUST PUT ALL BIAS ASIDE AND LET THE CHARTS DO THE TALKING OR WE'LL SEE ONLY WHAT WE WANT TO SEE
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Monday, 21 March 2011

Vix Buy Signal

A Vix Buy Signal for equities triggered on Friday, after the Vix traded above the daily bollinger bands, then closed back inside, then fell the next day. We often see these at the start of big bull moves and they're fairly reliable bullish indicators, though as you can see from the chart below, they sometimes precede sharp dips, and the one triggered on the bounce just after the flash crash last year was not a buying opportunity:
My ES and NQ targets aren't any different really from the ones I gave in Friday's post, and you can see those here. One thing I noticed over the weekend was that an IHS has formed on the SPX 15min chart, as well as a rising wedge. I'm not wild about the quality of the IHS though and am expecting one to form, if one does form, at one of the potential necklines further up:
We've seen a strong rise overnight, but I have mixed feelings about it. We're seeing some negative divergence on the ES & NQ 15min charts, and copper has not confirmed the rise so far. I'm still watching the IHS on copper that I charted on Friday and it hasn't broken up yet:
Oil's likely to be interesting this week, with civil war in Libya and trouble elsewhere in the Middle East still. We've put in a decent looking right shoulder on the IHS I posted on Friday and if oil breaks 104 with confidence 'll be looking for a new high at 110:
I've got a declining channel on silver that I'm watching with interest today. So far it has failed perfectly at channel resistance with negative divergence on the hourly RSI. If it fails to break up I'll be looking for a downside target in the 33.2 area:
USD has broken support and I'm expecting more downside, and potentially a lot more downside. There is however one last declining resistance trendline that EURUSD must break through to reach my next target in the 1.47-8 area, and that is the main declining resistance trendline from the 2008 high. The trendline is unproven as it only has two touches so far, but a lot of people are watching this and resistance will be slightly over 1.42:
We're looking at a big gap up this morning, and obviously ES and NQ might just gap and go, though I'm not really seeing much evidence to support that so far. If ES and NQ break the overnight highs with confidence that will look bullish for today, and those are at 1291.25 and 2251.5 respectively. I'll also be watching the copper chart, but with copper at 431.5 at the time of writing, a break up before ES and NQ looks unlikely.

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