Monday, February 23, 2009

Chartology: Technicals Suggest VIX Preparing To Rip

The VIX chart below indicates that the downtrend from the November high, the 55-dma and the interim high from February 2 have all converged in the 47.15-49.54 range. The market has unsuccessfully tried to break above the 50 top over the past week. The Jan 28 - Feb 13 lows are all against the 76.4 retrace of the bounce from the Jan 2 low, and a closing break of this resistance level would be significant. In Elliott Wave terms, we are in the beginning of the 5th wave of a sequence starting in May 2008.



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2 comments:

rahmin said...

it doesn't look like we're going to get that rally this week after all, regardless of how oversold the market is...

thanks for the analysis.

GTC said...

We'll rally enough to suck in some more of the bulls before it "rips". The biotechs are keeping the NDX above the January lows, when that falls apart is when I believe it rips.

And I plan on loading up huge on VIX calls and DXD, QID into an expected rally later this week.

The market often sells off the Monday after option expiry so I wouldn't look as today as more than that. Volume was not huge either.