V bottoms: If you go back to the March 09′ lows and look at every bottom that the market put in since then and through to the present, you will see that when the market finally started to move up for real it did so with a V bottom. It looks like that’s what we’re witnessing now. While we have had several V bottoms in the last couple of months that failed, with today’s $SPX close 20pts above its 50MA you just have to think that what has been going on for almost a week now has a good chance of continuing.
The tell very well may have been or could be those two, back-to-back 90% down days on September 30th and then on October 3rd. This mystery will probably be solved before too long.
Based upon the bullish X of the 5EMA up through the 10EMA for IWM, I took a small position in TNA at 37.80 near the close. This is a small starter position so that if I’m wrong and have to sit through several more weeks of market consolidation then it will be more annoying than painful.
Bonus chart. $SPX broke down out of this line chart symmetrical triangle and has now pushed back into the pattern. A close above the 1210 area, which could happen Tuesday or Wednesday, would bust $SPX out of this pattern.
Charts courtesy of StockCharts.com
Don’t get me wrong. I’m still pretty skittish. The $VIX remains in the 30’s and while volatility has taken a back seat in the last few days, it hasn’t gone away. If the $VIX should close in the 20’s before the end of the week, then that would be bullish going forward. Using the more conservative 9/20 method, $VIX should/could/might/most definitelywill get sell signal tomorrow. Not the first time this has happened since early August, but maybe this time it will stick.