S&P
500 was down 2.7% Friday. VIX was up 12%
to 38.52.
VIX is implying a move of 11%
over the next 30-days. I think VIX is signaling that the market is likely to continue falling for at
least a couple of weeks more. If the
economy keeps sending bad signals it could be longer than that and we may well eventually
see the major declines ahead as we have suggested.
On
the other hand, we need to keep in mind that we don’t really know the future of
the market and we must be ready to buy if market action indicates a move to the
upside. It’s the old “trade what you see
not what you think” approach.
The
Market is fast approaching the 1119 area on the S&P 500 and that is the
prior low it made on 8 August. We need
to watch the volume since we’ve visited that level 4-times already (1121 on 10
Aug and twice to 1124 on 19 and 20 Aug).
We have never gotten below it. I
don’t think 1119 will be the low, but that’s just my opinion.
I
will watch volume and the Navigate the Stock Market analysis carefully as we
get around the 1119 level. If the volume
is low enough, we’ll be able to buy with the knowledge that most of the sellers
have been washed out. Higher volume
would mean further selling ahead.
Another
clue is sentiment. Sentiment is currently
low, but perhaps not low enough to signal a bottom.
Today’s
big move down actually signals a possible move up for a while so this
discussion could be premature.
I
also need to watch and see how the market looks at the 1119 level. I may want to take profits on the short
positions in the trading portfolio. A
lot of traders will buy the low if the market doesn’t break much below 1119
regardless of the volume; if that is the case, I may not want to hold short positions.
The
Navigate the Stock Market analysis is still HOLD.
I sold on the 27 July sell signal at S&P 500 1301 and I am
defensively positioned with only a small amount of my portfolio invested in
stocks. (Zero stocks in the 401k.) I am
near 100% short in the trading portfolio.
(See
the page “How to Use the NTSM System” – the link is on the right side of this
page).
