Spent the weekend eating and consulting on chicken salad. What did I learn? The chicken salad business is not a good one to be in, unless you are in the slaw and potato salad business too...
As we are between fib levels for a retrace of P1 (between the 38.2% and the 50%), I really expect us to make our way to 108.4 before a true turn around. We are approaching a trendline that was support during the early part of this bear market and now is acting as resistance. The market should pull back after a test of this trendline (its one of the green dotted ones, up to you to figure out which one :-P)
A test of the red trendline on the VIX chart would correspond to the same test of the green dotted line for SPY.
Currently the market is massively bullish (the CBOE Put/Call ratio is below 0.6 as of Friday). But unemployment is still remarkably high. Cash for clunkers ends tomorrow, what do you think that will do for new car sales? Retail numbers have been ok the last couple of months (unexpected drop last reading), but what is it going to look like with out the new car sales?
There is still a glut of foreclosures in residential and CRE is starting to collapse.
"RAH RAH! We are saved!" is only going to last so long as American workers are still losing jobs at a very high rate. How much are you going to keep up your spending habits when you see your neighbors out of jobs?
I think this Christmas is going to be VERY LEAN. We will spend more time with our family than money. The weak retailers went under at the beginning of 2009. Expect many more retailers to be weakened to the point where they will be gone in 2010. This will put extreme pressure on CRE and the institutions that hold those loans. Its going to be tough for the government to bale that one out.
Good luck to everyone...and if you see Southern Taste Chicken Salad out there...buy some! All natural ingredients(antibiotic free chicken) and more chicken than any other chicken salad on the market!
We have not broken out of the green resistance line that served as support during the early part of this bear market. I am still looking at 108 (50%) retrace as the turning point. Its hard to see it going higher from here, but what the heck I picked a spot :-P
Vix is holding the red support line...
Looking for this indicator to give me a hint...once it crosses over, that could be all she wrote.
A test of the red trendline on the VIX chart would correspond to the same test of the green dotted line for SPY.
Well, since the VPN is down and I can't do the work that pays me real money, I will post a few charts :) Complex right shoulder has formed...end of day Friday was pretty wild.
Ok...still on track...buy how off could you be after only a few days :-P
Vix has held both trendlines. Which is interesting, I was thinking the VIX would break through the red trendline that has held during the entire bear market, but it is still holding.
Looks like a head and shoulders might be forming.
Vix has held the red trendline. This is bad for the bulls. There is room for the market to rise more (VIX to fall back to the red trendline) before the beginning of a big drop.
Note I am in the P2 camp finally...timewise its still possible we are in 4 of P1...but its getting less likely daily.
Bearish rising wedge in the short term. Bad Cisco numbers and jobless claims could be a downer for tommorrow.
Another hanging man formation has occurred. This will require confirmation tomorrow to see if its really a true change in trend.
A little bit of a bearish hanging man formed. But it looks really dangerous. Stochs have curved back up.
Vix is showing a little bit of a shooting star. This is looks positive for the market as a falling vix should imply a rising market.
Finally, we are about as bullish as we were at the top of the market.
We have basically been rallying from 67 in March to basically 100 last week at the end of July. At some point we will need to retrace significantly.
The rally at the end of July surprisingly closed above several long term trends.
The vix has traveled to the middle of the channel. A good retrace of the SPY would require the vix to travel to the top of the channel. MACD on the vix looks bullish still. So I am expecting a pullback in SPY really soon.
