It was pretty obvious, a couple of weeks ago, that oil and gas were finally going to break down [see: Once More With Feeling.] The trick was how to accomplish it without tanking stocks in the process.
This morning, VIX tagged our downside target – the bottom of the long-term yellow channel. The 38% plunge since May 29 has (so far) easily offset the damage that the oil and gas breakdown would have done.Now that the channel has been tagged again, will we revisit the 2017 strategy of daily algo nudging? All those dips below the yellow channel bottom (signified with yellow arrows) were instrumental in getting and keeping SPX back above 2138 (the 1.618 extension of the 2007-2009 crash.)We should find out soon enough whether the 2.24 extension at 2703 is equally important.
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