07/13/2009 Market Recap: VIX

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VIX is very close to a new low while SPX is still far from a new high, this is not a good sign.

  Trend Momentum Comments - Sample for using the trend table.
Long-term Down   Idea for trading intermediate-term under primary down trend.
Intermediate Down Neutral  
Short-term Up* Neutral  

One day rebound doesn’t mean anything, let’s watch how the market unfolds tomorrow. In today’s After Bell Quick Summary, I mentioned the possibility of a pullback tomorrow, the strength of the pullback will tell us lots of things.

I’ll pay attention to 2 things tomorrow:

1. VIX almost reached a new low today while SPX is still distance from a new high. This doesn’t mean much now, but another day like today, VIX will be at a new low. From chart below, according to what had happened recently (when SPX and VIX had negative divergence), I don’t think it’s a good sign.


Also have a quick look at 7.3.3 VIX:VXV Trading Signals, another sell signal was triggered today.


2. 1.0.3 S&P 500 SPDRs (SPY 30 min), the rebound today stopped right at Fib 50. We’ll see if it could advance further to Fib 61.8, as usually most rebound completes around Fib 50 and after all SPY is very overbought now.


Two additional charts for your info only:

3.4.2 United States Oil Fund, LP (USO 30 min), lots of positive divergence, I still think oil will rebound which is good for the stock market.


5.3.1 Financials Select Sector SPDR (XLF 30 min), ChiOsc is way too high, XLF may pullback tomorrow.


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