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Friday, April 24, 2009

VIX Divergence, E -minis again

Not much to get overly excited about if your counting on shorting this market, but the VIX failed to make new lows while the SPX made new highs as compared to a few days ago. That is bearish divergence for the SPX which reveals an underlying weakness perhaps.

The extreme overlapping zig zag I mapped on my daily update is not a bullish structure in the overall scheme of things when you step back and look at the overall wave structure from a bigger perspective. rope-a-dope is more like it.

But I got to hand it to the bulls, this market refuses to retrace back to the 810 level let alone the sub 800 level. Perhaps this year "sell in May and go away" will truly be in play. Maybe 4 more days of hard scrabble and then next Friday, May 1st, the market has a nasty bear day.

Doubletop at 870-875 so far with VIX divergence, intra-market divergence, E-mini futures MACD rolling over and SPX daily rolling over along with waning upward momentum = bearish next few weeks. If not then upside surprise for P2......I am long in my mutual funds in my 401k and will remain so at least until the 200DMA on the SPX is hit...and even then i may only shave back 1/2 depending on what the wave structure is showing at that time.

The market does not like anyone profiting. Going short on Friday is never a popular option for very short term traders. So a big gap down Monday would not surprise me at all, meaning you won't be able to max profit unless you went short late today. Disclosure: I bought a chunk of FAZ at $8.12 this afternoon figuring Monday will be just such a day. I still hold QID and SDS as a long 401K hedge and they are a small bit underwater so no big deal I'll see what shakes out Monday.

The e-mini chart is a sort-of an expanding triangle so I labeled it as such.


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