Feb 16

Weekend Outlook for 18th February 2013 – Most boring weeks of 2013 – calm before storm?


If we take a look at previous 2 weeks we can see how much markets have gained:

SPX: 1513 (2 weeks ago) , last week ( 1518 ) , we closed this week at 1520. This is a 7 POINT gain on SPX in 2 weeks and 2 point gain in 1 week. Markets is literally doing NOTHING lately. Neither bulls or bears have been able to make much lately.
Dow Jones: 14.019 (2 weeks ago) 14.022(last week) today 13.981 (actually down jones been moving LOWER last weeks, but kinda flat too)

These 2 things tells us that either the MOMENTUM on rally is about to turn ,, or we consolidate before another push higher ? Lets take a look at things and see what is most likely.

1. VIX made a lower low than in January this week and forming a major bullish divergence on MACD ,, with SPX moving higher , this is usually very bullish for VIX near term and bearish for markets.

2. If we look at breath we see NYSI summation index already turned to a sell signal which is bearish. Its above 1000 which is very overbought area and turning down. This tells us that markets might go higher , but stocks not really following, only few stocks pushing higher but generally stocks is loosing momentum.

3. TZA in a very tight bullish falling wedge, the longer it stays here the bigger the breakout is going to be when it finally breaks out. Made a bullish harami cross candlestick on Friday so a green day for TZA on Tuesday will confirm a reversal.

4. SPX hitting MAJOR trendline resistances from past years, with NEGATIVE divergences very clearly,, it cant be long before markets giving up.

5. TRAN been this overbought 3 times in past 3 years,, this was both followed by a correction/pullback.

Conclusion: All in all – markets been the most boring last 2 weeks of this year , not moving at all. What I feel is that its “calm before storm” begins , and therefore we just need some patience until markets really moving. Sometimes you gotta be patient in trading when nothign really happends, but I believe that VIX is about to explode higher with markets lower as we also can see on the Italian markets something bad is coming. I’m staying heavy short and waiting out and hopefully this week will give us some more action.

Bears will be back i’m pretty sure!


 

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