A Little Perspective....08.31.15

Here's a little lookback on how the summer months have played out so far...  and a reason not to get too enthusiastic about that 1000 point pop we saw last week.  I'm a technical guy about 95% of the time with a healthy respect for the HFTs and those wild and crazy politicos in China, Greece, Puerto Pico, etc.who love to manipulate the markets  By the way...anyone notice that Triparis resigned? Now we'll have a whole new Greek drama coming up.   OK, enough gripping.
This is a 4 hour bar chart of the past 100 days and you can see we basically went nowhere during that period until the last 2 weeks in August when Greek worries worn the markets down and then the Chinese dropped the devaluation bomb and took the SPY down another 15 points just like that.
Now.... the current chart does not look bullish to me.  If, in fact, we see weakness tomorrow and the next day we are more likely to revisit the mini-crash lows..... so caution is critical at this junction.

VDX Updates..SPY, XLU, FXI....08.29.15

Friday's closing market commentary can be viewed here.
We saw that whopper buying spree that we forecast but the ongoing situation is actually cloudy.
Odds for continued bullish activity are strongest for Monday and Tuesday as the last and first trading days of the month.  After that the September sigma looms but we all know that news surprises have what's been driving the markets for the past 4 months so anything can happen.
I do not like the parallel downslope VDI + and - signals on all three charts...this has resulted in selling in recent past instances. For now we just play our models....which have performed well in the face of recent market turmoil.  After all the panic over China (FXI is the top 25 Chinese stocks...think Chinese Dow) really nothing fundamental has changed other than a devaluation of the yuan by 3 % and a modest lightening of interest rates. The endemic contraction of the economy remains a real issue and we could easily see a couple more legs down before a real uptrend sets in.

Follow-Through...08.27.15

Another strong day...actually stronger than yesterday based on the NYAD.  2 hours before the close the market makers had a little fun with the rest of us and dropped the markets by a couple hundred points before commencing a strong and persistent buying spree in the close and into the afterhours.
So tomorrow's Friday and we may see some pullback but then next week is the end of the month so there's the bullish odds building.  But then there 's September's stigma as the historically weakest month of the year so it's not at all a done deal that its clear sailing ahead.
The SPY/SH delta neutral setup worked perfectly again today, closing out the SH side just 6 cents from the high and producing a nice net 1.87% return on the SPY side (2.47%-.06%)

A Whopper Oversold Bounce....08.26.15

The opening pop of 400 points looked like it was going to crater midday as gains dropped to only 120 points and then....dovish comments by the FED set off some serious buying and drove the Dow up 619 points at the close.  Tomorrow we'll how much of today's buying was short covering and then comes the dreaded Friday which is typically weak to red.
The Ergodics and the ADX were nicely aligned for the afternoon session and volume was about 250% normal ...but I don't think we're out of the woods yet folks.
Note the Mosaic MR  model adopted a delta neutral position yesterday and today...which turned out well with the limit stop on SH firing only 5 cents off the high.

Two for the Books....08.25.15

The NYAD opened at a wildly enthusiastic 15.01 and promptly sank all day long...reversing an opening gain of over 400 points to a closing loss of over 200 points.  That's a Trap Door setup that will go down in the books as one of the worst....ever.   Nothing like a 626 point intraday swing to keep your blood pressure up. Pity the poor guys that placed buy orders intraday in their mutual funds as the market rallied and then got filled at the close.  That's one reason I would NEVER, EVER buy another mutual fund.  There's a couple other reasons but ETFs are so much more attractive than mutual funds that I have a hard time understanding why they still even exist.  (just my opinion of course).
Here's the latest SPY Ponzo based on Monday's close and the forecast is somewhere between grim to dismal.  I'm not trying to be flippant but keep in mind that the Ponzo is based on what's happened before over the past 25 years when SPY has encountered current price action. Caution, caution, caution ..... 

One for the Books...09.24.13

Futures were down hard Sunday night (China was down > 10%) and with over 25 million SPY shares trading BEFORE THE OPEN odds were it was going to be bad. The NYAD opened at .01...I don't ever remember seeing a number that low.   S&P futures limited down and were halted along with a slew of other issues while the beloved VIX jumped over 50%.  Not a happy situation when the market plunges 1100 at the open (unless you're short). With tech leaders falling 8-9% and many of the large caps looking terminal the markets began a slow crawl out of  S6 levels up to S3 and eventually S1 (for a while) before turning back down in the afternoon session and closing hard, fast and down on huge volume (4 X normal).
 Now the bad news.  Historically speaking, plunges like today's tend to revisit before achieving a meaningful and sustained recovery....hence we will be on the lookout for the telltale "hairy bottom" candlestick pattern over the next few days which may signal a possible recovery.
The SPY chart below does not begin to impart the drama that accompanied today's action...

VDX Updates +......08.22.15

With the VIX popping 25% on Thursday and then 46% on Friday its now at long term resistance levels.  That should serve as some sort of comfort to battered bulls but in reality we could see a couple more legs up in the VIX before that beloved hairy bottom pattern appears.
Now we have to be concerned about opening rallies that turn into Trap Door setups and the misery and loss of capital that ensues.
Hey!....I'm normally a pretty upbeat guy but this is serious stuff.... and.....just to add to the worry beads...September....just 10 days away.... it typically the weakest month of the year.
So what do we do?   Cash is king right now.  There was a little afterhours pop in most issues on Friday but we talked about this before....the big prop shops love to goose a falling market into the close just so they can sell it down hard the next day...so we have to be wary of false reversals.
Here's a look at 4 VDX charts...SPY, FXI (China), FXE (Euro) and UUP( US dollar).Aggressive traders may want to focus on the FXE/UUP pair either as ETFs or in a Forex context if you trade currencies.  China has been slammed again and again and again but the bad news is I don't think we seen a bottom there yet.