Tainted Alpha

The markets have arrived to the crucial point for the short term direction. If the markets manage to close above today’s close at least for three consecutive sessions we could be poised for a breakout to the above. If the today’s levels don’t hold up the route to S&P 500 1000 mark is open.

Chart 1. S&P 500

Wednesdays data from China (CPI, PPI, retail sales) could be the catalyst. To be noted, the volume is light and declining and the volatility is low (both historical and especially implied), maybe a contrarian signs for a positive move.

Chart 2. VIX

On the other hand, looking at the VIX cyclical lows, the falling volatility has recently been a clear sign of a market short-term top.

I will wait and see for a couple of days, and then chose a direction.

S&P 500, VIX

This entry was posted on Monday, March 8th, 2010 at 5:00 pm and is filed under Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.