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One of the biggest reasons why I was largely in cash throughout the summer and early-autumn was not simply because the market was, net-net, going sideways, but rather due to the “violent indecision,” as I termed it. It is not always what the market does that is dispositive, but rather how it does it that matters most. With loose and sloppy chart patterns and intraday swings of 2-3% in the major indices commonplace, it makes it next to impossible for swing traders to capture high probability entry points on the way to profitable trades.
Although the intraday swings remain more herky-jerky than usual, they have calmed down slightly. The bulls are looking for the violent indecision to become less so in the coming days, and today is a decent start. The plunging price of copper remains problematic for the bull case, as does a lack of bonafide leadership in equities. Nonetheless, things can change in a hurry, and I still see a bunch of charts that can go either way.
The one thing that I can assure you is that nightly homework is required here now more than ever, in order to capture the essence of whether the market is. in fact, changing character here in favor of the bulls.
Finally, while I am not a huge fan of technical analysis on leveraged instruments, the VIX is looking tired after a multi-day run here. If volatility is on the cusp of moving lower, despite whatever headlines there are, that should bode well for the bulls. Watch this potential bear flag closely.
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the VIX isn’t a leveraged instrument, it’s a statistic. and you’re right to be skeptical with respect to technical analysis on a statistic.
Good points.