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Friday, 12 August 2011

Vix Buy Signal - Take 3

I'm trying out Snagit for screen capture and annotations for the next 30 days and I'm pleased with the results from trying it out so far this morning. Any feedback welcome. I'm adding a signature to each image as a few times a month a chart I post goes viral and gets ten or twenty thousand views in a day. We'll see if any of those viewers become regular readers now that I've added my blog address to the charts.

Vix closed back within the daily bollinger bands yesterday so that is the third attempt at a Vix Buy Signal (for equities) in the last two weeks, and the second this week. The close back within the bollinger bands triggers the buy signal, but the signal then has to be confirmed by another lower close, and the last two signals have failed there. We'll see if this one can do better:
In many respects that was a very significant breakout yesterday, though the weak close on SPX weakened that slightly, and kept the close within the trading range for the week:
There's some reason to think that we might see some weakness at the open today. a rising wedge formed over the day yesterday and was just breaking down at the close. I tend not to trust these one day SPX patterns though, as they often play out in the futures market overnight. As the overnight session saw a 40 point pullback from the high then that may well be the case for last night:
In terms of major patterns though that was a significant breakout on SPX yesterday. Credit to Cobra for spotting the rare (and reliable) diamond bottom on SPY. Here is the SPX version on the 15min chart and the upside target is 1243 by my calculation, slightly below the 1258 cutoff I gave earlier in the week as a likely limit for any counter-trend rally here:
I posted the triangle on NQ yesterday morning with a warning on the chart that triangles are very prone to false breakouts, and that's exactly what we saw yesterday, with a strong reversal after the initial break down and then a break up with real conviction. Technically the target for this NQ triangle is 2370, which looks very ambitious. The first target in practice though is the triangle top and resistance level at 2240:
Copper finished yesterday's candle well above rising support from 2008 so copper futures have definitely bounced there now. I'm expecting a retracement into the next major support / resistance area around 422.5, with an outside shot of making the next big level up around 451.5. The trendline is the lower trendline of a broadening ascending wedge and theoretically the next bounce might take copper to the upper wedge trendline well over 500, but I'd be very surprised to see that:
Oil is bouncing nicely within the broadening descending wedge I've been posting. My target is in the 95-7 area, depending on the time taken to reach the upper trendline:
EURUSD has been trading around 1.427 as equities have been hammered over the last three weeks, and I've been wondering whether EUR might take off when equities made a tradeable low and broke up. No sign of that so far and EURUSD has hit 1.427 again this morning and reversed so far:
I'm pretty confident that the short term low is in, and I'm expecting SPX to rally into the 1250 area before another move down. We'll probably still see big intraday swings though I'm expecting them to get smaller. I'm leaning towards seeing some early weakness today.

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