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Monday, July 13, 2009

07/13/2009 Market Recap: VIX


VIX is very close to a new low while SPX is still far from a new high, this is not a good sign.

  Trend Momentum Comments - Sample for using the trend table.
Long-term Down   Idea for trading intermediate-term under primary down trend.
Intermediate Down Neutral  
Short-term Up* Neutral  

One day rebound doesn’t mean anything, let’s watch how the market unfolds tomorrow. In today’s After Bell Quick Summary, I mentioned the possibility of a pullback tomorrow, the strength of the pullback will tell us lots of things.

I’ll pay attention to 2 things tomorrow:

1. VIX almost reached a new low today while SPX is still distance from a new high. This doesn’t mean much now, but another day like today, VIX will be at a new low. From chart below, according to what had happened recently (when SPX and VIX had negative divergence), I don’t think it’s a good sign.


Also have a quick look at 7.3.3 VIX:VXV Trading Signals, another sell signal was triggered today.


2. 1.0.3 S&P 500 SPDRs (SPY 30 min), the rebound today stopped right at Fib 50. We’ll see if it could advance further to Fib 61.8, as usually most rebound completes around Fib 50 and after all SPY is very overbought now.


Two additional charts for your info only:

3.4.2 United States Oil Fund, LP (USO 30 min), lots of positive divergence, I still think oil will rebound which is good for the stock market.


5.3.1 Financials Select Sector SPDR (XLF 30 min), ChiOsc is way too high, XLF may pullback tomorrow.



  1. Yup, either that ($vix near the low/spx not near high) or we are going back to teens for $vix and new bulltard market born?! But what are the chances (new bulltard market)?

  2. many thanks, Cobra, for your in depth analysis.
    Your blog is my daily must-read.

  3. I think the market is doing a repeat of the first week of June '08. It got to its 20 day average then so I could see it pop to that line in the morning. McClellan oscillator surprisingly rallied nearly to its O line. (-19) a usual resistance area in a downtrend.

    Mr. Panic

  4. Great update Cobra.

    I notice from your seasonlity chart, Mon 07-13 and Tue 07-14 had a strong upside bias,..then the seasonality bias goes flat to negative. IMHO, Monday could have been it.

    Another seasonality plot from Sentimentrader:

    ..shows the big UP day occuring on the 9th Trading Day of July (ie. Tue 07-14),...BUT, my personal bias is that Monday 07-13 was it.

    My next 3 wk cycle (likely pivot) date is Thurs 07-16. It is 13 mkt days from the previous pivot on Fri 06-26.

    Regards, Jim P.

  5. Agree. Not much technical damage on Monday. another manufactured squeeze to benefit the banksters like GS (who I believe will be the next Enron by the time this is all over with.)

    A few charts below suggest that the next big move is down, and that the pattern is mirroring last summer's pattern as suggested by Jim:



    Bear market lows in the 5 big bear markets this century have ended with a GAAP PE under 10 and a dividend yield of 6-8%. Today the SP500 PE is 63 and the dividend yield is under 3%.

    The big drop could happen at any moment.

  6. Cobra

    Thanks for all the time you put into your blog. Great analysis.

  7. Just remember, support Cobra by clicking the Ads... :)

  8. And just three days left for that big boy who bet on VIX options up to 45 to break even with 800k!

  9. Cobra, looking at $VIX, I think is about to take a cliff dive again... death to volatility... teens here we come... although on the other end, look at ISEE, wow they sure are bearish bunch... unless is a OE expiration shenanigan, not sure how to read ISEE...


  10. I don't see VIX taking a cliff dive...

  11. Cobra, I certainly hope not, but if we crack under last low, it might...


  12. I saw Art Collins give a speech a month ago and he has his own seasonality studies. He says to buy the market on the 21st of the month and hold it to the 6th day of the next month. He then says to sell it (or short it)on the 7thday and hold to 20th day (maybe21st---don't trade just on this info) He says both are winning trades but they even work better in their appropriate seasonal cycles (ie. sell from the 7th to 21st during the negative May to October seasonal period and vice versa buy during the positive November to April seasonal cycle). And interestingly enough we have a solar eclipse on the 22nd which is equidistant to the lunar eclipses (which I think most subconciously knew) of July 7th and August 6th. This solar eclipse is part of a Saros series that dates back to the 1300s and regularly occurs every 18years and the first total solar eclipse of this series occured in January of 1721 (which was the final collapse phase of the South Sea Bubble) Most of the years of its cycle have been bear market bust years.
    Mr. Panic (1907/2009)

  13. Thanks, Panic, that's a good info. I guess the month seasonality is related to fund managers as I saw a similar report.



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