timwest
Long

Dow Jones $DOWI & S&P500 VIX spikes for 2016

DJ:DJI   DOW JONES INDUSTRIAL AVERAGE
1105 2 30
In previous charts I have published here reveal the powerful pattern of VIX             spikes of greater than 5 points followed by 75% retracements which highlights when big money interests are accumulating shares from panicky sellers in heightened volatility markets.

The "strong hands" buyers calm the market and absorb the selling pressure and drive down volatility in options prices, which sets a floor for future setbacks in the market.

The graphs above show you what the 4-VIX-Spikes of 5+ points look like this year and how to analyze them.

Once you "see" the pattern, I think it is rather intuitive.

Refer to my other publications on this unique effect and join me in our intra-day chat room called "Key Hidden Levels" right here at TradingView.

I have this as a "long" idea for the main purpose that the mid-point of the last accumulation was tested and held AND the September setback held the top of the May and June accumulations, which was to be expected.

The logical exit on any longs purchased down around the 18,130 level (midpoint of VIX             spike & retracement) would be around the $18,500-$18,600.

Tim 12:22AM September 29, 2016 18,339 last $DOWI
Comment: Another VIX spike of 5 points as the market slipped right down ONTO the important price levels I had drawn on the chart for you to expect to see strong buying support. This selloff was from nerves about the coming earnings season. We face earnings reports from 6 DJIA stocks in the next 5 days and another 3 days after that. The markets are jittery during the quiet periods of these companies as nervous investors anticipate what the forecasts will be for the coming quarter. Early nervousness happened from Alcoa's earnings, but Alcoa isn't a great barometer anymore, probably since the 1990's. The first 6 DJIA earnings are from: JPM, IBM, GS, JNJ, UNH, MSFT. Keep your eyes open as nerves are very high and these 6 stocks are not great harbingers of the economy since they don't provide deep insight into consumer spending (which is still the grand majority of the economy).
Comment: Support was tested and held and we still face a barrage of earnings announcements over the coming days and weeks. This is the jittery season as we are in quiet period. I cannot emphasize this enough. It is important to understand what drives stock price movement and it is mostly fear, then hope, then greed, in that order most of the time. INTC's earnings were good, but sales forecasts were a bit disappointing, but perhaps management wants to keep expectations low so they can accumulate more stock and hopefully beat expectations next quarter. Companies love to beat earnings because that used to get rewarded in the stock market (years ago). For now, reading sentiment is best done by looking at the VIX which measures REAL MONEY flowing into options. See for yourself how I interpret it which is different from the "traditional explanations" you hear around the street. See you in "KEY HIDDEN LEVELS CHAT ROOM".
Comment:
snapshot


Another VIX spike of 5 points gives us another support zone. These are still of "small spike variety" and we are just lingering around. Normally, like a boxer when he gets knocked down, the market stands back up and gathers itself and resumes the advance. This latest VIX spike pushed prices to a slightly lower level, which spells some trouble. If the sentiment were optimistic here, I would be very bearish looking for major movement to the downside, but with sentiment the lowest in decades and prices up near the high and above support, then I am constructive on the market.
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Wow no comments on this one! Many took some off the table with the recent down turn (also very technical more than -1% down in the recent days for the indices). Are you projecting long after the reports or you will be in before? markets at the top of their price, it is harder be long with uncertainty...but markets climb a wall of worry
+1 Reply
"Wall of Worry" - "W.O.W."

So true.
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