Bulls has so far defended the markets extremely well – and more than I have been expecting for the past several weeks. However VIX has also been holding up strong versus the SPX going higher. This means VIX is more or less the same spot at 14-16 as it was when SPX were trading at 1800-1820.

This usually could mean that someone is hedging themselves against a drop OR they expect a coming drop in markets.

We reached new all time highs and so far we cant fight it for now. Everything on bull signal still , however we still got a lot of “cautious” signals.

All in all:

1. VIX is near low levels – I think we might see 12-14 area on VIX before it bottoms and runs higher again , so downside in VIX is not much from here , but might see the last flush down imho.

2. NYSI is extreme overbought now , but remains on a BUY and bull signal. So this is telling you to be CAUTIOUS if we start to turn around , cause that might tell you there is a lot of downside possible , but so far it remains on a BUY signal.

3. SPX made new all time highs – so we might grind slowly higher for this week before a turn to downside.

4. I’m seeing a VERY VERY bearish pattern on Nikkei. This tells me that I think NIKKEI topped out and the correction is NOT done on NIkkei. Too much damage is done and another sharp sell off due in Nikkei. If we see more sell off in Nikkei I doubt SPX will go a lot higher from here before turning down too.

Conclusion:

All in all bulls in CONTROL and as long we remain above around 1840 level I think BULLS is going to hold the ball and grind us higher this week. However a break BELOW 1840 , might spell trouble for bulls – so stay tuned and be prepared.