In VIX / out SPY

May be...

In the begining of the correction?

Continuing with the post "DOW: Green Monday?", now I think a correction is very likely. Not necessarily tomorrow, because we need some confirmations, but the process is in development. We have some sell signals.

In the short term:

First, look at the UUP (BULL US Dollar index ETF). If we look at the moving averages that I use to track trend (when the 22 EMA cross the 100 SMA in the 15 minutes frequency chart, and is confirmed by the price, we have a signal), they are showing a change in trend. In addition, we can notice the bullish divergences. This does not mean that the indexes are going to fall from here, but they could begin to move sideways. This is not good for commodities and latin-american indexes.




Then, we have the BUY signal in the VIX. It is the same signal as the one in the UUP. Look that the charts, they are very similar.


This scenario is right, if we suppose that the markets are going to maintain the negative correlation with the dollar that they had until today.

Finally, if we look at the indexes, it is interesting to notice that we do not have a sell signal yet. Then, It is early to short the market (in my humble opinion). We need a confirmation in the SPY.


Gaining more perspective, here some daily charts:

SPY:



UUP:



QQQQ:


DOW JONES TRANSPORT:




Ticker sense: (bullish)

http://tickersense.typepad.com/.a/6a00d8341c924353ef0115723ba8d7970b-popup

In my opinion, we should look at the 950 level in the S & P 500. This is the key support.

A look at the VIX

This is the VIX in a 3 days frequency chart, 3 years long. It is holding in the long term dinamic support, and look at the divergence in the RSI. It's scary, isn't it?



Now lets take a look to the VIX / SPY ratio. Look at the ADX in april 2007, and look at it now. Looks like it is ready to take off? Interesting divergences in the CCI.