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Originally Posted by scorcherjf
VIX has been low for quite a while so yeah I'd probably agree there will be some reversal soon (next week perhaps).
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The 5%+ premium that SPX is trading at over 50dma has, in the past, signalled a -10% average decline over a period of 2-6 weeks. Same with reaching 70 RSI.
I also have taken a look at TVIX, which follows the VIX, and it's just had a Short-term KST oscillator go bullish (registered on 18th, but KST signals at end of the week on a friday or end of the month). For those who might not know KST oscillators, they are longer oscillations compared to MACD and generally considered much more accurate buy/sell signals. It's duration lasts 2-6 weeks as well. Makes me think February is when this will go for a full correction of about 10% to low 1200's.
VIX set to pop to 26 levels, which as this point really is like 25%-30%. Should TVIX keep 2x gains, 50-60% rebound (potentially) for this month.
1365 looks a long ways away. They say IBM earnings held the DOW up today. I saw the impact and it contributed +60 points. Man... you know you have to run when 1 company is holding an entire index afloat.
Edit:
Rally missing one thing: A Crowd.
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The January stock rally has brought with it hopes that the market will rebound from last year's middling performance, but it has lacked one key ingredient: enough investors.
Average daily volume on the New York Stock Exchange hasn’t eclipsed one billion shares since Dec. 16—a flat day for the market—and volume has been above its current 50-day moving average just once in the last six sessions.
“Market strength has been undermined by light trading volume,” Ari Wald, equity analyst at Brown Brothers Harriman, said in a note. “Light selling pressure in November was a reason we viewed the November-December correction as a healthy pullback that set the S&P 500 up for its most recent strength. My view is that stocks can grind higher given light volume, but it is difficult to sustain gains given these conditions.”
The early advances for 2012—the best since 1987—are reminiscent of how the previous year started. The S&P 500 registered a 3.33 percent jump at the same point in 2011, but NYSE volume at that point averaged nearly 1.1 billion shares a day.
The Standard & Poor’s 500 has rallied 4.5 percent so far.
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