Apparently it looks as if the bulls were not fully shaken out yet, despite Tuesday’s big drop and Thursday’s continuation. It’s no wonder then why the VIX is holding back and why the market has been consolidating off the lows all week. The VIX SHOULD be moving up, however there’s still some hope on the tape and if you’re a bull, that is not good news for you. Betting long on a bear flag is a tough game to play.
The action in the past 4 days does not look healthy for the market. I drew lines showing that if indeed the VIX was holding itself back due to stupidity, then if it “catches up” with the market, I can see the next flag down happening… and since that will put us at new lows, that makes it even more frightening since we have no immediate support levels to gauge the fall. I actually don’t want another flag lower, but the way it looks sure appears likely.
However…
… if the VIX manages to erase that spike we had this past Tuesday, then we could rally quite strong. In fact, the market is due for a short squeeze very soon, and tomorrow’s close (final few hours) is where I will be looking.
Right now the correct side continues to be the short side. But on this bear-controlled tape, I would be very cautious of a relief rally. So stay away from entering new shorts here, and think about exiting some shorts on morning gaps.
Long, medium, and short term I am bearish, but I’m trading the bull-side for the next few days on the very very short term. With options expiring this weekend, it just makes sense to expect nonsense.
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I’ll be trying to play the orange colored lines. In other words, looking to get long on a relief rally if market can fill a gapped down day back to break even. I’m not counting on it, but like a sniper, I’m waiting for my shot.
With gold approaching/crossing $1000, could that be the true volatility/fear index at this point, and not the VIX???
I’m sure glad i did this post. prepared me for today’s tape. charts coming up in a bit…
I couldn’t get over here before market close–shoot
GDX SHORT, read it and weep, if you didn’t get in today. I expect GDX to drop 11% on Monday
Maybe not in one day–but for the week
I welcome the opportunity to buy more GDX.
And it helps that I sold the March 40’s.
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