Tuesday Nov 29, 2011
VIX dropped 2.34 while TLT recovered most of its early losses yesterday. Recall my observation that mom and pop cannot buy the VIX, an index reserved for professionals, but mom and pop can buy TLT. So the average investor does not believe in this rally. I looked at lots of charts this morning. The overall price indices do appear to be enjoying an oversold bounce. The internals are at a must do point on the NYSI as I showed last week.The Master Indicator, the Weekly A/D line looks like it wants to move up one more time.
Daily A/D Line
This daily indicator very much needs to hold its low of the last two days. Yes this looks toppy. The market needs to act in such a way as to discourage the bears and a rally here would do that.
We put a lot of stock by the internal indicators. Here is a daily chart of the summation index I showed last week. As noted, the next few days will tell the story. It is truly must do time.
NYSI Daily
THe one day rally stopped the decline but it will take more upside action to reverse this decline.
VIX the professional's insurance, closed under its 50 day MA yesterday, dropping 6.79%. VIX really needs a decisive close under 27.5 to rally the markets.
TLT a govt bond fund remains quite high. This tells us the average investor has no faith in this rally and that he still believes a .9% five year t note is a good investment. That level of fear is not commensurate with where the market is now. In other words, TLT is out of whack, much higher than it should be relative to the market. Investors are certain Fall, 2008 lies around the corner.
UUP the US Dollar, did top as we thought but of course, a downturn needs to continue.
Canadian Dollar
The overall trend in the Aussie, Loonie (Canadian) and Euro are down. For the time being it looks like we are in for a relief rally in the all three to the upside. That will be supportive for stock and commodity prices.
Elsewhere
Apple bounced off its 200 day MA, But the 50 and 200 day MA are both flattening.
Ralph Lauren jumped 4.7% but again the 50 day MA looks to be flattening. Has anyone devised a ticker for all the expensive watch ads on page 2 and 3 of the WSJ-that might be another clue for when the mania in luxury goods rolls over.
QQQ reversed at 53 but its 50 day MA is failing at the 20 day which is 56.18. That will be the level to watch for QQQ. Yes the selling the last two weeks in QQQ has been quite strong, but that was also the case going into the October low.
Yes the weaker European countries are now paying higher bond rates to sell debt. That's what happens to risky debtors But those rates are hardly historically high.
Watch the VIX and the US Dollar.
Crude oil remains strong near $100.
Comments