Swing Trading Strategies & Stock Picks Since 2003

Sometimes daily and weekly patterns of $VIX can be significant, and in context may be nearing a low which is leading soon to a near-term market top. The daily chart is messy, but lets look at the weekly chart for better pattern analysis.

There is very loose confluence at a level of 23-26, but symmetry from the first down leg in $VIX at the beginning of 2009 is around 15. Momentum on $VIX is still negative, so perhaps the rally can continue. Still there is a lot of support on $VIX around the 26.55 area, all the way back to 35.60. That is very close to where we are now.

I am not going to do all the indexes but look at the daily $SPX  chart for a moment. I thought last week we might begin the rolling over process, but a new high was put in on Friday. What is critical here is that despite breaking about the 845 area, there is tighter confluence at 894-893 and even more confluence as we get up toward 943-956. We have twice tested the 875 -877 area and failed to get through it, If we do not this time, we may be running out of momentum in the short run.

Also remember that when Wednesday hits, all the IRA contributions for 2008 cease (as the deadline passes). That alone will dry up inflows considerably. Also, we will begin to get the earnings data beginning tomorrow for the 1st quarter in earnest. We already know that the 1st quarter is likely to be lousy for most companies as the recession plays out. What we do not know is what companies are thinking about as the rest of the year unfolds. We typically get a pretty good glimpse of that in the conference calls that occur after the end of the 1st calendar quarter. That will indeed be interesting, and could fortell the top or perhaps the expansion to new highs on the indexes.

I think one has to be very suspicious of earnings as we go through the data. I think, from a position trading or investment perspective, that one must decide what to do after this next correction (and there WILL be one at some point) to make bigger decisions if one is to hold fo longer that a few days or a few weeks. There is plenty out there that suggests the rally will run out of gas very soon. What is yet to be determined is how deep the next correction will be.

I think bulls need to be particularly careful at this juncture as "stress test" data begins to come in for the multinational banks and as other banks begin to show how truly strong their balance sheets are.

There's still a bunch of nastiness out there to be dealt with. Keep ample powder dry as we head into the summer months and I think there will be other opportunities out there.

That is my story and I am sticking to it. I will take a look at all the indexes as I see fit. Sorry for the delay in getting at least this much out.