Tuesday, April 11, 2017

Selling Picking Up

The VIX is one again a prescient predictor of upcoming equity weakness.  The VIX acted stronger from Friday when the SPX was still chopping around breakeven levels.  Yesterday was also another day when SPX was trading slightly higher to lower and VIX rallied anyway, in front of a 4 day trading week (Good Friday is April 14).  And then you have today.

The dam burst and VIX is now the highest since November.  The French elections, Trump uncertainty on foreign policy, no signs of tax reform imminent, etc.  It finally caught up to the market.  The intraday dip buyers have had a field day the last couple of days, with sharp rallies intraday.  I don't think that will happen today.  Put/call ratios remain fairly low for such a weak day.  Looking for more selling.  SPX 2330 is a support level, below that you have the lows from 2 weeks ago at SPX 2320.

It's too early to buy the dip, but I am planning out a BTFD strategy as I write this.  Probably will start with some buys from 2325 down to 2300, if we get there.  Looking to exit long in Treasuries at that time as well.


Anonymous said...

What about war? Like in the korean peninsula?

Market Owl said...

The markets are counterintuitive. Usually moving the opposite of media expectations. Trump just promised a dovish Fed chairman to replace Yellen. TThat should be good for a long term rally in SPX.rump wants low rates, he will get them from his puppet Fed chairman starting in 2018.