Now That Everyone Need Never Worry About Equity Market Risk – Is the Worry Over?

"Nothing shall interfer with risk markets" is now the popular determination...after the largest terrorist attack in years combined with horrendous economic data produced a large bounce - why worry? 

We tend to believe that this compunction is in for some more testing and that intervention will only go so far. VIX was in a position where, despite giving a valid signal, it is of a low-quality variety that would usually lead to a bounce but need a secondary signal for a larger and longer reaction. Having reach our 2010 to 2015 target the S&P was entitled for a bounce as  would be normal for retests of previous upward impulses on the daily charts. Our systems that took longs into this area are not virtually flat and will close these trades at any time. This also would fit the MSP timing.

The NYSE is in a remarkable bearish Head and Shoulders pattern that virtually no one seems to be focusing on. and moreover, the shorter-term pattern shown below is not too bull friendly either. The fact is, that we broke out into a thin zone with what would be called a full test. The normal and highest probability reaction for these types of event is a drop through the thin zone to the next supports as can be seen on previous events on the chart.

S&P500 Daily and Weekly Market Structure Projection

S&P500 Daily and Weekly Market Structure Projection

S&P500 and VIX Buy Signals

S&P500 and VIX Buy Signals

NYSE Levels Chart

NYSE Levels Chart

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