Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Monday, August 25, 2014

Holding Steady, No New Position Yet

Stock Market Technical Analysis Blog

click on image to enlarge

In the market today , the S&P opened above the 1995 level at the 3 am open of the SPY and held it until 8:30 for a gap open higher.  As I discussed in the previous blog we closed our last 1/4 position as the S&P hit the 1995 level on Thursday.  As we continue with our plan we are staying all cash for the time being with this hop over the 1995 line.  We are looking for a solid retest and then a push up from that line before opening a new long position if we do.

Another situation we are watching closely is the VIX  (shown in the lower chart overlaid above).  At the S&P gap open today the VIX briefly dropped below the red and blue lower channel lines.  Shortly after that it jumped back up into both channels and climbed through the day. This doesn't bode well for this hop above 1995.

While we are still all cash, we realize that this is the point where the manipulation becomes heavy and unpredictable.  Thus, we have to wait for something with a little more meat on the bone before we will be convinced this level will hold and be a base for a push higher.  Should Team Yellen decide they might not be able to build a base at this level and instead gap the market up again to start a short squeeze, we may have to reenter reluctantly on the fly. 

Trade well my friends