Monday, September 21, 2009

Monday VIXology

The current VIX/Qs charts look eerily like last week's with a slight improvement to the Qs overbought conditions and the VIX's oversold condition.
The VIX's mid-panel technical have returned to the zero line and Moneystream has actually turned upslope. The RSI2 has also turned upslope showing the greatest promise this month for a possible run back to the lower LR30 channel band @ 26.
The Q's mid panel technicals on the other hand are showing some slow down and Moneystream is hinting at becoming downslope.
In contrast, the Q's RSI2 is not showing any weakness at the current time leading us to be cautious about a bearish stance at this time.
From a risk management perspective, the odds favor continued bullish action. Should the Q's RSI2 finally roll over and penetrate 80 accompanied by a MACD zero line cross, the odds would then favor a bearish position.
Taking off my quant beanie for a minute I also note that the DOW is currently at 9820 and the SPX at 1068. In the past we have seen run-ups stall at milestone numbers . . in this case DOW 10,000 and SPX 1100, further suggesting that we'll see these numbers prior to any significant reversal.
Maybe Rob Hanna will chime in with some numbers here to confirm or deny.
Tuesday I'll get back to pairs trading and show how some nice low risk gains can be captured by playing the currency ETFs.

No comments: