Watch this chart as it has a fairly good predictive record. Once the blue line, which is the 5EMA of the $VXO, tags and/or drops below 15, then something is probably going to happen in the markets and if the past is of any value in divining the future then what happens is not going to be fun for the bulls. The red vertical lines mark the previous times the 5EMA has tagged or dropped below 15 and show that some turnings lag by several days while other times market reaction was immediate.
You can easily set up a chart like this using $VIX. I have one that I use but I just prefer the $VXO for this even though it is now the volatility index for the S&P 100.
$SPX w/ $VXO (Bookmark the link)
Chart courtesy of StockCharts.com
The chart above hints that the markets are perhaps 3-10 days away from a turning. Longs may be able to squeeze a few more percentage points out of their positions but the risk of a reversal, and perhaps a significant one, will increase with each passing day. Breadth indicators are now giving neutral readings so no clues from them; however, $NYSI is struggling and while it hasn’t rolled over yet it could at any time.
Money in the market is money at risk. Be careful especially over the course of these next few days.