Wednesday, February 23, 2011

Important Market Juncture

The chart below shows the VIX and the SPX:

  • 1271-1275 is the first support level
  • a break 1261 support may suggest that the decline may be of greater amplitude than previous declines since the Aug 27th low.
  • 1173 is the major support level that should contain any decline if the bulls are to remain in charge.
  • Bullish Scenario: The expected Energy Point between Feb 28-March 4th could be a low instead of the anticipated high. (i.e. a sharp decline into that time frame) A decline into this time frame then a rebound would be suggestive of a continuation of the massive rally since the summer of 2010.
  • Bearish Scenario: The market moves sideways or rallies into the Feb 28-March 4th time frame then breaks below the 1261 level. (i.e. A double top in the 1340-1360 area.)
  • VIX should be monitored closely. A break above 23.84 and the descending trend line from the previous highs would suggest that the bull could be in jeopardy. and that a significant intermediate cycle decline is developing--or possibly a decline of greater price and duration.

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