Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

SPX, INDU, NDX, VIX: Signals Suggest a Bounce Is Due

By

The market is oversold on an hourly basis, and VIX is suggesting a buy signal for equities.

PrintPRINT
MINYANVILLE ORIGINAL There's not much to add to yesterday's update, so I'll simply let the charts do most of the talking. The first chart worth noting is the Volatility Index (^VIX), also known as the "Fear Index" since it substitutes as a good indicator for investor sentiment (high VIX means investors are fearful; low VIX means complacency). VIX has closed outside its upper Bollinger band the last two days in a row . This is often the precursor to at least a short-term rally in equities.


Click to enlarge

Next is the S&P 500 (INDEXSP:.INX) daily chart. As yet, still no material change here.


Click to enlarge

The SPX hourly chart is showing some early bullish signals in RSI and MACD.


Click to enlarge

The Dow Jones Industrials (INDEXDJX:.DJI) probably still needs at least one more fourth wave rally and fifth wave decline -- though yesterday's little rally and decline could theoretically qualify. The strength of any forthcoming rally should narrow the options. (continued, next page)continued, next page)


Click to enlarge

An interesting minor break in the log-scale long-term Nasdaq 100 (INDEXNASDAQ:NDX) chart, though the noted trendline is still intact on the linear chart (not shown). The notation about "bull market" oversold simply refers to the fact that "oversold" doesn't mean the same thing in a bull market as it does in a bear market. Bear markets can stay oversold for a very long time -- so depending on whether the cycle has shifted or not, the RSI reading might not mean much.


Click to enlarge

The 10-minute NDX chart also looks like it wants a fourth wave bounce and another decline. Trade back above the noted level would be a warning to bears.


Click to enlarge

In conclusion, the market is giving some signals that at least a short-term bounce could start at any minute. At the moment, the wave structure isn't conducive to drawing much in the way of any "new" concrete targets -- right now it's more about watching how the market reacts to support and the key overhead levels. I'll draw new targets after the next decent bounce. Trade safe.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE