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Today the markets did it’s best to camouflage it’s real intent by throwing the bulls and the bears both a bone. The morning looked like a full fledged decline was about to be under way as the Nasdaq dropped to it’s lower trend line and did exactly what you would expect it to do when you have to factor in POMO money into the equation…bounce. We’re getting conflicting signals as the VIX continues to make new highs (barely) and the major indexes struggle to retake the middle line in the Keltner channel.
The VIX in relation to the keltner channel continues to bounce between the middle and the upper line which is associated with a bullish pattern. I’m not that worried about the reversal in the VIX as long as we start to turn back up very soon (like tomorrow).
I’m certain the bulls loved the bounce at the 50ema on the SPX, and with good reason, however every-time it touches that key moving average that support weakens. With my timing signal still bearish I’m holding my shorts and will continue to appreciate the pockets of strength in the market from afar. Yes this signal is taking much longer to get me in the money, but trend traders must exhibit patience at the beginning of a trend change and not try to trade in and out at the first sign of trouble.
