Friday, July 17, 2009

Friday Wrap - Pushing the Envelope

At Friday's close the VIX was down 1.08 or 4.25% for the day. That's a big move relative to the size of the SPY (down .02%), the DIA (up .23%) or the darling of the day, the Qs (up .54%). I suspect a lot of the move had to do with reconciling Thursday's VIX contra move, and the net effect is to leave the VIX on the now adjusted LR30 channel on a day 12 count towards a reversal. Got that? A bit convoluted perhaps but that's just how I see it right now.
And above are the Qs pivot bands and Impulse Indicator looking at weekly bars. Pretty obvious the Qs are in rarefied territory as they made a new high for the year today and finished only 1 thin penny off the daily high. That's very unusual for a Friday and perhaps indicative of things to come. Just because the markets are really overbought doesn't mean they can't get really, really overbought.
So far I've avoided getting short on the intraday charts, as the NYAD has given scant indication after the open that weakness is forthcoming and it's really saved my bacon this week when that little voice in the feeble old right side brain was screaming. "short".
The Qs Impulse Indicator is now at levels not seen since the big October plunge, suggesting that the spring is poised to unwind dramatically.
At the same time it must be noted that as a result of this week's action the Qs are now flashing a brand new LR30 profile (I'll post on Monday) that has the Qs resting dead on an upslope LR30 channel mean......not negative and not positive, but looking technically tired and overbought.
Finally, if you got caught in short positions this week, don't feel too bad. Some of the best and the brightest (no names please) of the technical bloggers had called for the SPX at 850 (it closed at 940) and I was thinking along the same lines going into the week before euphoria hit.
Next week should be interesting. . . .

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