This week, I am not going to lay out the statistics like I normally do, just the vital ones. On the daily, we just touched back to 30 RSI and now are at 31.59. The weekly RSI is still going down and currently stands at 44.46. In May, SPY bounced off the 50 week moving average, and we have done the same this week convincingly. 

SPY also broke below the 38.2% intraday, but not by end of day for 3 days straight. With the abundant fear out there, this is significant. It should also be noted, VIX did not go over 20 nor 25, which are associated with panic. 

It is likely we will enter an up swing trade. It will likely be significant as long as Washington talks on the fiscal cliff do not completely break down. As seen today, rumors can move the market. Look at QE's effect on SLV for proof. Then once QE was delivered, the market became giddy and then let down really quick. I would not be shocked to see that occur now with SPY. If you want to play this short term rally, you will likely need to do this before the details are completely worked out. Of course, this will be in an environment of fear and news based swings. And, yes, the fiscal cliff is on the radar now, but we could easily start to look closer at the low earnings, overall national debt, and possible credit rating drop.

VIX is closing in on it's descending trendline, and I believe this may be our key to play. I will be looking at 1-2 month VIX call options. The buy timing would be around a VIX of 15.0 - 15.5 this week. 15.5 is one std dev under the 20 week moving average. If we do not get the expected spike, it is still a very safe number to sell a week or two later.

Weekly VIX with Trendlines

Weekly SPY with TrendLines

SPY Weekly - bouncing off the 50 week MA

Miguel Nasiff
11/17/2012

Good morning Brian, I have read and I read your comments and analysis. I have not yet adequate technical tools as esgtoy stage of learning. But looking at the market every day I develop my intuition.
Based on this, my intuition tells me that next week the market will lose more than it will go up and that is why I think UVXY $ 27.37 may exceed the $ 31 and thus make a difference more than $ 2.50 per share.
What opinion do you have?
I want to remind you that do not speak English and I write and I read through a translator is not very good as to translate and then read it seems that talking about Master Yoda, you understand, right?
I await your reply privately hereby or in my email box is: miguel_nasiff@hotmail.com
You enjoy the weekend.

Reply
Bryan Gebhart
11/17/2012

I am replying from iPhone, so if it is not real long or clear I apologize. The market ended the week on good news with respect to the largest worry in the short term, that being the fiscal cliff. As a result we can see a hammer with two times the wick than body ratio. It rejected important fib lines by EOD three sessions straight. It is also the exact turning point per 50 week moving average.

The only down marker I see is in the last breath of trade the market gave up a fair amount after solidly rising leading up to that.

We rarely see strong action after 2pm so by itself that was special, but it seems possible we may start down just a hair. That would be an opportunity to buy the dip for me.

Lastly and most importantly, this is my plan, but follow your gut and intuition. I am holding UPRO at 78.025 still. I have looked all over the charts, but you may see something or interpret something I do not see or understand. I put this here for you to think about the facts, not as much my opinions. Base your end decision on your group of facts.

Oh yes and one more thing, just because we are rallying up does not mean we left bear country so expect volatility and moodiness from the market. I will try to post more on this later.

Reply
miguel nasiff
11/17/2012

Thank you very much Brian, I have always considered your opinions. We keep in touch.

Reply
Miguel Nasiff
11/19/2012

Good morning Brian. I'm considering making an equity investment in permanent annual rent for a while to do day trading. You recommend?

Reply
Bryan Gebhart
11/19/2012

That is a great question, and if you do not mind, I would like to make a formal post to that question, as I think that may help others too. It will be in the Trading Principles category. Please check for an answer there no later than this afternoon.

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