Maybe it should read “be put away in May?”
It occurred to me over the weekend that Friday’s posts probably sounded a little schizophrenic. “Next Stop 1462?” does seem a little out of step with “VIX Ready to Rumble.” Is it me, or is the market perhaps a little schizophrenic?
This morning’s drop does little to clarify things. Again, we reversed right at the H&S pattern shoulder line — dropping as low as 1395 on the Chicago PMI survey (off 6 points to 56.2 for the third monthly drop in a row — see details below.)
As anticipated, VIX did do a little rumbling this morning, up almost 7% to 17.41, currently loitering at 17.30. These RSI channels have done an amazing job at forecasting VIX over the past couple of months.
Unfortunately, we’re no closer to resolution of last week’s “analog vs alternative” quandary. For a long, tedious discussion please re-read the past few posts from last week. The cliff notes version is: “50:50.” That is, both options are on the table, and will be until we see some sort of break out. I’m keeping my powder mostly dry until the path forward is more clear.
I’ll continue to watch the red-dashed RSI TL on SPX above. I’m also watching the McClellan Oscillator, which is often a good indicator. Like many other indicators, it’s on the verge of a breakout or breakdown. Now, if we can only figure out which one…
The economic data continues to forecast slowing. But, at what point will the market care? As we’ve discussed many times — good news is good, and bad news is good (if it stimulates another round of QE.) It seems the only thing that might quash the QE hopes is an announcement from the Fed that it’s off the table (don’t hold your breath.)