Stock Market Technical Analysis Blog
click on image to enlarge
Wall Street has been wanting a new drug and yesterday morning they got it with QE3 plus and staged a two-day short squeeze like we haven't seen in a long time.
Which brings us to where we are now shown in the charts above. The top chart is the daily bars of the S&P 500 and the bottom is the daily bars of the VIX. The VIX is the leading indicator for turns in the S&P 500 chart above it. As can be seen after the vertical two day stock market short squeeze the VIX is back down to the red line and the S&P is back up to its upper channel line now.
It will take more than short covering to drive the VIX below its horizontal channel which, barring ridiculous market manipulation, will be required to take the S&P higher from here. Wall Street will need to put serious money out there if it wants to take us higher, we will see.