Stock Market Technical Analysis
Click on chart to enlarge
Today would be a good point to take a look at where the UUP (Dollar Index) and VIX are. The two left side charts are the UUP and the right side are the VIX. Looking first at the bottom left corner chart, the weekly bars chart of the UUP, we see the red weekly 5 EMA line is trying to turn back up at the blue weekly 20 EMA. At the same time, the price bar is getting support from the weekly 50 EMA line. This could be a powerful pivot point. So far, the bias is to the upside on the UUP. In the chart right above it, the daily trendline chart of the UUP, is also building a base on top of its longterm blue line channel and actually has an ascending triangle formation. Barring intervention in the market, these two charts favor upside movement in the Dollar which causes upside movements in the VIX (Volatility Index) and takes stocks lower.
In the two right side charts, both daily charts of the VIX, we see that the stock market took a double hit today as the VIX opened above its 3 month downhill brown line channel as seen in the top chart and also opened above its pink 50 day EMA line shown in the lower chart.
Caution is the word here, the market is obviously trying to set itself up for a correction but the two months before the presidential election have historically been a period of very intense market manipulation. Looking at the money flow in the big cap names and the Put / Call action, a lot of traders are preparing for a pullback. There doesn't seem to be any signs of heavy shorting though and a lot of traders don't want to take the chance of getting caught in an out of the blue short squeeze. Here for a while every move on the UUP and the VIX will be watched closely.