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Ugh! This is getting old.

October 22, 2008

I don’t know about you, but I would welcome a change from this roller coaster stuff every day.

The SPX actually closed at a new closing low today.  That is, after a rally after a lower intraday low.

I just want to point out a few things. For one, the volume today wasn’t anything extraordinary.  It’s probably not worth looking into that much, but looking at the volume I would guess two things.  1) Despite the large move on the day, the selling was not a new panic or reinvigorated crowd of sellers.  The buying off the low of the day was also nothing impressive, so I don’t think the buyers are ready to get serious either.  2)  October 10th was the closest thing we have had to a capitulation type reversal day.  Big hammer doji thing on very high volume.  This seems to be a pretty important level in terms of the “Is this the bottom,” question.

Here’s a look at the volume using the Total volume on the NYSE using symbole $TVOL.  Today was higher than the previous two days, but still below average for the peak of all the panic in the last few weeks.

I also wanted to show a somewhat interesting divergence of sorts between the SPX and the VIX in the context of the symmetrical triangle I have mentioned. Notice that as the SPX put in a higher low, while the VIX put in a higher high.  This is unusual.  We’ll see what happens, but I’m interpreting this as the VIX being overdone with a panic of higher higher proportion than the index action warranted.  If this is accurate, then the current levels on the VIX are probably too high and the market will find a footing sometime in the near future.  On the other hand, notice that the symmetrical triangle was broken to the down side today.  Watch for a retest of the breakdown level for a good bearish entry.

By the way, I’m back to bearish on the market posture due to the VIX at the highs again and the slightly new low on the SPX.

That’s all folks.

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