Watching VIX Closely Here

While the TICK is showing there is already at least one holiday auto-float program on the market, it may be a couple of days early to lay back and know that the market will do its magic holiday slow float up into Christmas.  Studying the VIX closely helps to read if an assumed upcoming market action is actually starting.  Taking a look at the two charts of the VIX shown below, the chart on the left is the Daily chart of large key moving averages where we see that the VIX jumped quickly from the EMA layup that happened mid month.  Now we see the same two EMAs trying to setup for another VIX jump higher.  Currently, they are neutrally compressed but the bulls need for the red line to cross down through the larger green EMA before they can kick back and start thinking about holiday eggnog.  If the red line starts to lift up from the green there could be problems.

Click image to enlarge

Looking at the right chart, a 120 minute bars chart of the VIX, we see that it continues its slow creep upward in its red channel and it's getting very close to the make or break downhill blue channel.  It's likely that the situation will not be allowed to be resolved either way until at least Monday because the powers that be do not want the chance of any market negativity when consumers are opening up their wallets to commence holiday shopping.  Maybe by the end of next week we will know if the sleigh ride into the end of the year is on or if investors will develop a bad case of indigestion.

Trade well my friends

Alan

SPY: Long Position Closed

The Nasdaq and the SPY may have reached a short term stalling point as of Friday as the SPY, Nasdaq, and APPL have all three had their upper short term channel lines shown to be resistance (shown in the three charts on the left side below).

Click on image to enlarge

The two VIX charts on the right side reinforce the possibility of at least a sideways movement here in the Indexes, if not a pullback.  The upper VIX chart, the Daily bars with a 5 and 10 EMA line, show that the red 5 is coming up under the green for a possible up cross in the next couple of days.  

In the lower VIX chart, the Weekly bars with a 5 and 50 EMA line show that if the Daily chart does up cross then the Weekly 5 could easily bounce up from the blue 50 EMA line and cause a hard pull back at least for a few days.  

If in the upper VIX Daily chart the red 5 cannot up cross the 10 line and instead gets pushed down by it then sideways movement is almost assured.  With the SPY and Nasdaq having such unusually tall short term channels, it may be a good idea to take trade profits here just in case the pull back happens.  I closed out the second half of my long SPY position Friday but have no interest in going short just yet.

Trade well my friends

Alan