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Market Complacency

 
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PostPosted: Sun Sep 03, 2006 6:54 pm    Post subject: Market Complacency Reply with quote

This week, there are two articles (also "SPX: Top of the Bearish Wedge"). VIX has generally been on a buy signal, since the daily VIX fell below the 20-day MA in July. However, the daily VIX has stayed at low enough levels over the past three weeks that a sell signal will soon be triggered. Consequently, volatility may begin to increase next week and at least one big market down day will take place soon. The chart below shows when the daily VIX spiked higher in mid-July, SPX fell from the 1,270s to the 1,220s (or 50 points) over a five day period. SPX closed at 1,311 Friday. Major resistance is the yearly high at 1,326. If SPX manages to rise into the 1,320s next week, a similiar pullback may take place quickly.

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