Nice observation, Bob. As you know, tightening bands can precede breakouts. Given that complacency remains at a high extreme in the long term, my guess would be that there's going to be a breakout to the upside in VXN's chart. Maybe the 200-day MA in that chart will be retested.
Since the VXN moves inversely to the Naz, this doesn't bode well for the tech bulls. The techs have been through yet another bubble, with absurdly high valuations at a time when the outlook is uncertain, and there could be hell to pay for it once again. But we shall see. The market is impossible to predict. All this is my opinion, and I have an unremarkable knack for being wrong.
(John Murphy appeared on CNBC today, and suggested the possibility of a move lower. He noted the breakdown of support levels for the NDX yesterday.)
Here are the CI's after the close:
ST Naz CI: 60.256, 19.597
MT Naz CI: 52.894, 35.302
LT Naz CI: 93.708, 88.941
ST S&P CI: 55.138, 10.278
MT S&P CI: 55.138, 10.278
LT S&P CI: 94.949, 90.886
This suggests to me that the market's shorter-term trend has reversed to the upside. It could reverse again at any point in this volatile market, but there is more room to the upside (if there are enough suckers out there, or fearless traders). If the shorter-term complacency indexes head into the high 90s again, there will be another great shorting opportunity. |
