The Market could be topping

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This thread was started by 'the chartpatterntrader', I was just adding some other info in it. If you would like to get some good TA chart reading, I recommend visiting his blog sometime. Its pretty interesting. http://thechartpatterntrader.blogspot.com/

The vix is sitting on support and the market may get more volatile going forward, but short term that may change if the Fed really signals a % rate cut. If the vix starts trending below 24 that will be a positive, but getting below 20 may be a bigger problem. Since this is the first 10% correction in over 4 years, charts tell us there will be some more testing going forward. Some have pointed out a possible inverse head and shoulders pattern in the SPX. Watch the vix ( the vix is inverse of SPX) and volume, to see if that pattern gets confirmed.

View attachment 2028
 
vix YTD, DJTA is showing low volume moves, the inverse H&S pattern might be a self-fulfilling prophecy as investors move ahead of the chart. Use caution, unless your following ebbnflow ( congrats). :)

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After looking at several charts, I've come to the conclusion that tomorrow is going to be a hugh day between the fight of the Bulls and Bears. If you believe in the power of the spoken word, all ears will be tuned in to what Bernanki has to say. Many of the indicators are cocked and really to go, but only need direction. The price of oil is puting a big drag on the DJTA in its downtrend. The VIX is right at resistence that can just as easly become support again. The 10yr T is right near 4.50 which is a big support. The SPX is near its 200 day ma. Bernanki and company must decide if that they are going to hold to the 'fight inflation' line or tackle the recession scare by tossing a bone to the markets. IMO, if politics are involved look for the bone.

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FUTURESTRADER said:
V,

$TNX looks to agree with you political bone assessment. Finishing at low of the day. Good point
Click to expand...


If Bernanki does toss a bone, look for a big sell off in bonds has investors go back into stocks. But Bond investors are smart, they can also be saying we are heading into a recession or something else has them spooked. Short term, I would still look for some profit taking in bonds.

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vectorman said:
DJTA chart max info, ( bubble?):

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http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=DJTA
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Definitely not a bubble. To get a better look at it, use a logarithmic chart instead:

big.chart
 
That's it. Bernanki and Bush have spoken. Feel better. For some reason I keep hearing there is a problem. We don't really know how bad it's going to get and even though it's growing bigger, we feel your pain and will help as needed. The day is young, but the VIX can also be looked at as a feel good or bad indicator. As we drift below 24.00 investors are feeling better and the market will go up. Right now at this time the VIX is showing its a little better going forward. There was a gap up Aug 28 to 29. The halfway point of that gap up is 23.27. Guess what the low today of the VIX is? 23.19. So if you feel that is enough to show a gap filled, where do we go from here. If the VIX keeps down trending, the next support is near 20.80, and the market will drift higher. The DJIA is up, but once again on low volume, but it may pick up this afternoon. The DOW also broke through a neckline for an inverse H&S pattern, but cannot yet be confirmed because of low volume. I don't see any conviction yet in investors, talking heads are saying the shorts are scared and just covering. I think if this rally is going to have any legs we need to bust down through the VIX 22.83 and add more volume to the DOW.

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http://stockcharts.com/school/doku...._analysis:chart_patterns:head_and_shoulders_b
 
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not as much volatility as one would think - yet. With so much focus on commercial paper rolling over, and LIBOR at a high you'd think XLF would be reflecting more fear.
 
If I were a voting member of the FOMC and read the beige book data just released, why in heaven's name would I vote to cut rates? To bail out wall street, hedge funds, and investment bankers?? The data seems to just scream: "hold the course!"
 
Pilgrim said:
If I were a voting member of the FOMC and read the beige book data just released, why in heaven's name would I vote to cut rates? To bail out wall street, hedge funds, and investment bankers?? The data seems to just scream: "hold the course!"
Click to expand...

I think I agree with that-

This is probably not good at all for stocks.

Look out below.

Maybe Back to 1400-1380 on the downside?
 
There is no reason for them to hold rates steady - afterall they are data dependent and inflation is in their comfort zone. That's the only reason they need to cut rates. They will do it perhaps several times before the year ends and this will help all the arm resets. The stock market is simply doing the dance routine - two steps forward and one bigger step backwards. It's kind of a day trader mecca, but won't last.
 
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