My Hybrid Lindsay model calls for a low near last Friday (chart) and a high on Thursday, December 24. This matches typical option expiration behavior seen this year when equities tend to rally into OPEX (this Friday) and change trend soon after.
In addition, the McClellan Oscillator closed on Friday well below its lower Bollinger Band (200, 1.5). History has shown that a quick dip to just below the lower band usually results in a conclusion of the previous correction. However, a dip closer to negative 300 (as on Friday) often forecasts a lower low in equities (after a small bounce) or at least a test of that low.
Finally, the VIX, after bottoming on the previous Friday’s 34-day cycle low, had its best week since late August with a gain of 9.58 to close at 24.39 and above the upper Bollinger Band (20, 1) which is often a buy-signal for equities. Today is an expected monthly cycle high which forecasts a low in equities.
Click here to get your copy of the December Lindsay Report.
