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Saturday, September 12, 2009

The VIX Charts

The VIX is not the best chart to be counting wave structures I admit, but yet it does seem to follow the same rules and patterns.

The VIX just thrust downward from an expanding triangle. Is the thrust move over? Good question. Continuing positive divergences cannot be ignored.

Prices have been correcting since March, but I like to say Fear has been correcting downward for much longer. Its been nearly 11 months since the maximum fear was registered in October 2008.

The bulls still have control but eventually all trends exhaust. They can keep jamming it to the bears but it will take a lot of conviction and continuing buying that this market deserves to go much higher. This is not 1999. This is not the 2002 lows. This animal is different. This time, an entire way of life and a fiat financial system that exists only on faith is in jeopardy and real fear is very much grounded in the reality of the situation. The truth is, the nation is running a huge Ponzi scheme that will eventually reach its breaking point.

This Ponzi is in the form of debt at many intricate layers - personal, corporate, municipal, commercial, state, federal - the world is awash in paper that is full of promises. As long as faith holds, this system can exist for longer than anyone can predict.

But the harsh drop of 2007-2009 was likely but an opening salvo fired. Isn't it fascinating that all the wonder boys (Timmy G, Benny B, and the like) have all breathed a sigh of relief lately? Yet isn't it downright scary that they somehow all admit that the whole thing is a house of cards?

The President is going to give a victory speech outlining what a wonderful job the boys did in saving us from Depression. Is this Obama's "Mission Accomplished" moment? Wouldn't it be very ironic that the day he gave a speech, the market collapsed by 4-5%? You think he might just want to hold off on that? Doesn't the guy employ an Elliott Wave "Czar"?

Underneath all the stories and the anniversary of Lehman, don't you just sense that the storytellers somehow know that things are still way broken and that we bought nothing but time?

Don't believe hype that the collapse of Lehman caused the market to crash. The market was going to crash no matter what the storyline. Social mood cause the Cycle wave V to run very high in 2000. Social mood caused the expanded cycle b wave high in 2007. We, collectively participated. We nurtured the thieves. We elected the cronies.

And social mood turned downward and cause the crash. Mood changes first - then markets move.

The flattening 20DMA has consolidated under the flattening 50DMA. At some point, the market will cause a bullish crossover. That may be where the bears take the reigns of the trend again and set it back into its primary trend which is down.

There is no doubt that the public is engaged in this rally at this point. I do informal research on this with people all the time. At least those that wanted to engage. The bear market has been harsh. Some of the public will refuse to come back into the markets, and some are simply unable.

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