$VIX, $SPX, Write Offs


I thought (yes, thought), this pattern was going to be a Mat Hold pattern. For those who aren't familiar with that, it's a Rising 3 Method that does not retrace and confirmation of the pattern is a bullish candle above the prior close of the bullish candle before the 2-4 days of testing.

Since we have now exceeded 2-4 days of testing, this now looks to be a stairstep pattern without the bullish confirmation.

What will it do? I really don't know, but if you're playing this or any of the S&P derivatives like SPY or $OEX, contingencies for bearish and bullish plays can be made, one canceling the other. Let the stock or index tell you which direction to pick.

If the compression pattern is big enough, those might make some great daytrades, but only if you get in near the pivot points going in the right direction. Otherwise, if you cannot do manual intraday moves, wait until it breaks one of the pivots points in the correct direction (i.e., top one is bullish, bottom is bearish).



The $VIX looks like it's believing the market to be bullish (sorry, Tim), as the $VIX continues to go lower. Perhaps it will find support at 14 or 12? I'd like to see 12.
We're also coming up to the season where the mutual fund companies begin dumping their portfolios of the speculative stocks and replacing them with your good ole household, reliable stocks that people like to see like you GM, IBM, MSFT, etc. type stocks. From what I understand, they don't have to divulge that they have the other speculative type stocks through the greater part of the year. All they have to make sure is that by year end....thinking that's in the Nov/Dec timeframe, they have what is perceived as "good, solid" stocks in their portfolio.
Then, in the early parts of the year, like February, they begin dumping those slow moving stocks and replacing them back with the highly speculative stocks. So, we can begin seeing some transition of movements of money just for the sake of legal appearances.
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