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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: chowder who wrote (20055)	8/19/2003 10:51:17 AM
From: kodiak_bull	Read Replies (1) \| Respond to of 23153

Well, it's awfully quiet around here, and for my part I feel like an alligator getting his tummy rubbed. Yawn. When I look at the averages I see either (1) a sloping double top (on the SPX daily it forms at two gentle 1015's) about to grind or plunge down, or a pause before heading higher. Maybe I can draw a series of bullish triangles on the chart to support my view, maybe not. Kb Notes: As you can see in the following text [charts unavailable] from 21st Century, the VIX is now signalling, once again, a top: <<Rare VIX Reading by David Nichols The Volatility Index (VIX) dropped to a dramatic new low during yesterday's rally, closing at 19.28 after having moved as low as 19.08. The VIX measures the premium paid by options traders in the S&P 100 (OEX) options pit, and it's a time-tested gauge of sentiment. Essentially, when the VIX is low, it shows widespread complacency and comfort among traders, who are expectating more upside -- or at the very least, little downside. That's usually a recipe for a big decline. Indeed, since the bear market began in earnest in September 2000, we've only had 2 other VIX readings this low. Both previous times the VIX dropped significantly down into the teens -- as it did yesterday -- the market soon went into a major "waterfall" decline. The VIX isn't as good at precisely timing tops as it is at calling bottoms, but this is about as good as it gets for calling a top using the VIX. The VIX has moved down to 19, yet prices are still 15 points below the "breakout" point to the upside at SPX 1015. We should be within days, or at least a week or so, of starting a major descent. The market doesn't necessarily have to head off the cliff immediately, but it will be very tough grinding on the upside with the VIX this low. All the available "sentiment fuel" has drained out of the tank already. We had a taste of this yesterday, as many indicators were soaringly bullish, yet the S&P 500 futures had a hard time making any upside progress. The market is getting really bad "mileage" right now, which usually happens at important tops. And it's not just the VIX. For a more detailed look at current market sentiment, I want to turn to Contributing Analyst Jason Goepfert, who runs SentimenTrader.com -- available to subscribers on our web site. Jason has a "Composite Model", where he's modeling the sentiment indicators (both published and proprietary) that are most correlated with market direction, and weighing those indicators according to their correlation. Some of the measures used in the model include sentiment surveys, proprietary models of the Commitments of Traders data, put/call and open interest put/call ratios, volatility indices, and other sentiment indicators. Here are Jason's comments about the current reading on his Composite model: "This bout of speculation across a variety of measures has pushed the Composite model to a very low reading. The chart of this model as posted to the site is a five-day moving average of the daily readings, and it is now approaching its lower trading band (as are all the other models as well). However, today's daily reading of 23% has been seen only three other times since 2000 -- August 2000, May 2001 and March 2002, all of which of course preceded highs of some import. ">>