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The markets failed to follow through today, as was widely anticipated. We need to see a reversal, or at least a consolidation of recent September gains before blasting off in to the
traditional power months of October-January. Also as expected, the
Qs showed considerable resilience r
elative to the other indexes, especially into the close, and although the volume was about the same as yesterday,
selldowns were treated as buying opportunities.
Cucca does a great job of showing the trap door setup in the
Qs this morning, and that was a classic example. I suspect this weakness may follow through on Monday but am also expecting a resumption of the uptrend fairly quickly. Tomorrow I'll post a little study of
Qs behavior around the end of the quarter that may help put things in perspective.
The VIX finally got a nudge off the lower band with an initial target of the 10 DSMA which we may see on Monday. Based on the VIX study I cited yesterday, once the VIX departs from an 18% variance we can expect it to hit the 16 DMSA within 4 days 82% of the time. That would return us to a VIX reading of 21, approximately in the middle of the bands and set up for another run down.
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