The most interesting chart today was this one, the daily VIX. Recall how a few days ago I said that the VIX rarely continues to climb after gapping up to its upper Bollinger band. I was one day early as it turns out. Yesterday the VIX managed one more push higher. Today it made another attempt at its 200 day moving average but that was rejected too. Even more importantly, the resulting candle was a classic dark cloud cover. That is a strong reversal signal.
Now recall my recent post on Monday about how the VIX can predict the market. Today the VIX peaked and started going back down while both the Dow and the S&P continued their declines for the third straight day. I did a cross-covariance on the VIX that seemed to suggest that when the VIX peaks, the market will turn around within a day or two.
So the VIX seems to be saying that the market is ready to go higher either tomorrow or the next day. Supporting this is that the recent downturn has taken all of the indicators off their highly overbought conditions to oversold conditions. In fact, they are all a lot more oversold than they were after the last big dump on January 28th.
Add to all of this that all three futures are up significantly right now (1 AM EST), the ES and YM in particular both being up 0.42% with the NQ even higher, and I'm fairly confident in saying we're due to go higher tomorrow. Of course, the big caveat here has to do with Libya. If Col. K. does something really outrageous (though its hard to imagine him acting any more outrageous than he already is), that will definitely trump the technicals.
Today I took a speculative flyer in a company called Windstream (WIN). It took a beating recently but seems to have found a bottom and received an analyst upgrade two days ago. Greatly decreased selling volume seems to indicate that we're running out of sellers at this level. Its 8.14% dividend doesn't hurt either. We'll see if this does anything. I'm in at 12.22; it closed at 12.29.
Imagining the next bear market
12 hours ago