Friday, September 14, 2007

VIX Contraction Continues

After an initial drop, the Qs and the rest of the market quickly recovered up to yesterday's close level at the PP pivot. . .and then did basically nothing for the rest of the day. . . to finish down .02. The Qs are flashing a peek-a-boo overbought signal, continuing to show strong resistance at 49.28. All the buying was in the first hour on 24M shares after a completely manipulated drop of .42 on 3.5M shares IN THE FIRST 4 MINUTES ! So much for random motion in the markets.
The VIX popped up at the open then faded down with the rising market and then traded in a narrow range for the rest of the day to close up .16. The Bollinger Bands are continuing to contract and hug both the 10 & 20 DSMAs. I expect more of the same on Monday.
The NYAD was mildly bullish with a .97 median reading, while the TICK showed wide range 5 minute bars but no clear slope.
This was not a day to initiate new trades and the markets will probably continue to flounder until Tuesday afternoon, when you know who will open the flood gates. Caution is advised at this point, since the trading logic that previals around these events is best described as bizarre.

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