Friday October 12 2012
Elwood: It's a hundred and six miles to Chicago, we've got a full tank of gas, half a pack of cigarettes, it's dark, and we're wearing sunglasses. Jake: Hit it.
Elwood, The Blues Brothers head for Chicago
Well three weeks left to the election. Perhaps that has the markets stalled. Let's take a look at two views of where we might be headed. First the Gathering Storm of the VIX
Other than the outlier on October 7, the VIX seems to be making a series of higher lows. The last three weeks it has stayed amid the MAs, note we are using Fib exponential MAs here. But snce August we can make a case for a series of higher lows. And the MAs have not broken out to the upside, but appear to be basing. That does not mean we are at a top, but it backs up my contention that the risk reward ratio here is low, as the poor performance, typical of October, of the recent markets bears out.
What chart would combine the lure of emerging markets, commodity prices, and generally rampant speculation-you guessed it, Brazil.
Brazil has been the Country of the future since I read the Weekly Reader in the Sixth Grade. We identified the top in the Fall of 2010, and that continues to be the case. EWZ lost a third of its value from 2011 to mid 2012. Now it is bouncing but that is about all. Rio is one of the most expensive crime ridden cities on the planet without the discretionary income to support those costs. I suspect this will be abundantly clear on a break of 50 but that will have to wait until next year.
Well yes it has worked off its overbought nature via the MACD in the lower panel. But it is hardly the bargain it was in June. We exited Sept 18. I suspect this is simply the apprehension over the election.
More this weekend when we will have the weekly charts but this may continue to frustrate both bulls and bears in the short run.