The above shows the 5-day moving averages for the CPC (green line), the CPCE (purple line), and the VIX (violet line) at market close. The S&P 500 is in gray.I was previously using the "simple moving aveage" for the CPC and the CPCE. After further research, I discovered the "exponential moving average" (EMA) will provide better results. I have adjusted my charts using the EMA. The VIX in the graphs will continue to use the "simple moving average" (MA).
Both the CPC and CPCE spiked upwards yesterday and continue upwards or horizontal after close today. The VIX was leveling yesterday, but has now continued it's slope down.
Due to the timing release of the CBOE data in the morning, graphs of the CPC and CPCE are often skewed in the early trading hours for the current day. It suggested to not rely on these graphs until after 10:00 AM each trading day when the data typically settles down.
I view the 5-day MA chart more as a predictor of trend change with the 10-day MA providing confirmation. So far, we have no firm confirmation from the 10-day MA, so caution is suggested.
After Tuesday's rally, I expect some follow-through into Wednesday, but the daily stochastics are approaching a top, so we should see at least a corrective decline soon. Once again, I expect the market to rise into Friday's option expiration. But the markets will likely be very volatile before options expiration as the big players squeeze the overleveraged option speculators.
At the present, I am on the lookout for opportunties to sell into rallies on Wednesday. I will have to find an entry point into the daily channels that will offer a small profit if the market later turns around on me. If the market closes above 7,495 on the DOW for a day or two, I may have to rethink shorting this market.
I will be adding analysis of other trend indicators in coming days including the $BPSPX as a measure of the S&P bullish percent index, and the NYSE Oscillator (NYMO) as a predictor of short term bottoms and tops.
Good luck and good trading!
I view the 5-day MA chart more as a predictor of trend change with the 10-day MA providing confirmation. So far, we have no firm confirmation from the 10-day MA, so caution is suggested.
After Tuesday's rally, I expect some follow-through into Wednesday, but the daily stochastics are approaching a top, so we should see at least a corrective decline soon. Once again, I expect the market to rise into Friday's option expiration. But the markets will likely be very volatile before options expiration as the big players squeeze the overleveraged option speculators.
At the present, I am on the lookout for opportunties to sell into rallies on Wednesday. I will have to find an entry point into the daily channels that will offer a small profit if the market later turns around on me. If the market closes above 7,495 on the DOW for a day or two, I may have to rethink shorting this market.
I will be adding analysis of other trend indicators in coming days including the $BPSPX as a measure of the S&P bullish percent index, and the NYSE Oscillator (NYMO) as a predictor of short term bottoms and tops.
Good luck and good trading!
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