Stock Market Technical Analysis Blog
click on image to enlarge
In the Market Friday we had big index triangles waiting for a direction from the afternoon fiscal cliff meeting. When it leaked that no new plans were presented the market sold off hard into the bell and in the aftermarket trading.
Tonight I am focusing on a four-year chart of the VIX, with Weekly bars and the sentiment EMAs applied. Over the past four years anytime the smaller red EMA line crosses above the green line the stock market has sold down big for several weeks. Tonight's closing of the the current Weekly bar, shows the upcross has begun again. The upcross has happened three times in the past four years with each one marking the beginning of a couple of ugly months in the stock market.
As with any upcross on a Weekly chart, if there is an event in the following week that causes the price to reverse back down and close below the numerical value of the larger line at the close of the next weekly bar then the cross itself could be twisted back and possibly enough to morph the line cross into a neutral line merge situation going into the third week as happened in first quarter of 2011 and second quarter of this year.
Obviously, the only event of that caliber would be a real and genuine fiscal cliff deal being passed.
I am not holding my breath on that one.