Stock Market Technical Analysis Blog
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In the charts tonight I would like to focus on the VXX but first I would like to say a few words on the ongoing SPY on balance volume divergence. When you compare the charts on the left side above with last night's chart, we can see that the SPY dropped another dollar today but it happened on net 200 million shares of selling. Today's selling was actually three times heavier than yesterday's and tonight we not only still have the divergence but it has increased to $8 from $6 last night. If this relentless selling continues we should reach a short term oversold condition soon and the SPY and its on balance volume may get to be reconciled by the on balance volume lifting (net buying overall) instead of the SPY continuing to chase the OBV down. This situation will be closely monitored by professional traders until we see what should be a rapid reconciliation taking place.
Now on to the VXX (S&P 500 VIX Short term Futures ETF) which can be viewed as a reading on fear looking forward whereas the VIX can be viewed as a reading on the current level of fear in the market. Its charts are posted on the right side above, the bottom chart being a five year chart of weekly bars and the upper chart being simply a focused view of the same chart using daily bars.
Looking at the lower chart we can see that the VXX has been in a huge downhill channel for three years but in the past month has broken up out of that channel and in the past two weeks it has started to push up from that channel line. Anytime any trading vehicle breaks up out of a three year down channel, a substantial and extended move upward can be expected. If this happens the potential damage to the stock market could be significant. At the very minimum the VXX is a sentiment reading on stocks looking forward. Breaking out of a three year downhill channel is a huge change in sentiment.
On to the AAPL cluster below, last night I mentioned we could expect Wall Street's support at that lower channel line or below it and today they did come in and stop the decline in the afternoon as shown the lower chart with the dotted blue line. In the top left corner we see that the red 5 EMA sliced right through the green 10 EMA without an attempt to bounce there as also happened on the indexes.
Looking to tomorrow, with today's selling being somewhat overdone, it would be easy to bounce AAPL with a 5/20 red line/blue line bounce tomorrow as also is the case on the major indexes. We could easily have a relief bounce tomorrow.
The big picture clusters are shown below the AAPL cluster.
Now on to the VXX (S&P 500 VIX Short term Futures ETF) which can be viewed as a reading on fear looking forward whereas the VIX can be viewed as a reading on the current level of fear in the market. Its charts are posted on the right side above, the bottom chart being a five year chart of weekly bars and the upper chart being simply a focused view of the same chart using daily bars.
Looking at the lower chart we can see that the VXX has been in a huge downhill channel for three years but in the past month has broken up out of that channel and in the past two weeks it has started to push up from that channel line. Anytime any trading vehicle breaks up out of a three year down channel, a substantial and extended move upward can be expected. If this happens the potential damage to the stock market could be significant. At the very minimum the VXX is a sentiment reading on stocks looking forward. Breaking out of a three year downhill channel is a huge change in sentiment.
On to the AAPL cluster below, last night I mentioned we could expect Wall Street's support at that lower channel line or below it and today they did come in and stop the decline in the afternoon as shown the lower chart with the dotted blue line. In the top left corner we see that the red 5 EMA sliced right through the green 10 EMA without an attempt to bounce there as also happened on the indexes.
Looking to tomorrow, with today's selling being somewhat overdone, it would be easy to bounce AAPL with a 5/20 red line/blue line bounce tomorrow as also is the case on the major indexes. We could easily have a relief bounce tomorrow.
The big picture clusters are shown below the AAPL cluster.
Alan
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