Thursday, February 25, 2010

Sp500 & VIX


ESH0
As the SP500 index started the year with a 1113.25 low on Jan 4th, the market rallied to 1150 by the second week of the year. As the market failed to hold above 1150, it sold off and broke the lows from the first day of trading during the 3rd week of January. These Jan4 lows have now become resistance creating a right shoulder in an larger "h/s" formation. This recent test of 1113 has also created a baby "h/s" formation within this right shoulder (1092 neckline 1113 head). Bulls will need to clear this downtrend line from the head to the right shoulder to attempt to break the head and violate this "h/s" pattern. Bears will look for a neckline break as confirmation of "h/s" targeting the low 900s.

$Vix
Island reversal created in the VIX on 01/11/10 occured as volatility closed higher after making a 22 month low. This reversal may end the 13 month downtrend in volatility however volatility will need to stay above the January lows in order for this reversal to be considered.

Past performance is not indicative of future results. The risk of loss in trading futures and options is substantial and such investing is not suitable for all investors. An investor could lose more than the initial investment.

12 comments:

pythagoruz said...

Nice and very timely charts.

I've been watching that baby H&S, it broke today then reversed. The VIX too, tried to recover its 50 dma then failed.

To me this market just feels like its ripe for a big short squeeze. The news has been awful and the bears seem to have pounced with little success. Then I see stocks like BIDU and CREE going absolutely parabolic and I really feel like this bull market ain't over yet. The only way the kind of momentum we've seen can end is with a blow off top. A capitulation event like the short selling ban that started the collapse in Nov 2008.

I think you picked a great line in the sand with that Feb low (~1035) but I don't like the shape of this H&S. I'd like to see the right side of that left shoulder come down to a relatively flat neckline. I think that at the end of the day this whole pattern could wind up being the left shoulder of an even bigger H&S top but lets see.

Thanks for the post!

chintan shah said...

You are thanking whom for the post?

Here is a gr8 comparion b/w salaries at IB and McDonalds.

http://www.mergersandinquisitions.com/investment-banking-salaries-mcdonalds/

chintan shah said...

Have you seen Pirates of Silicon Valley?
its one of the coolest movie I have ever seen.

pythagoruz said...

Chintan, I was thanking ChicagoStock/Stewart for the post. I did not write it.

I did see pirates of silicon valley, a pretty interesting documentary. If you liked that check out The Smartest Guys in the room:

http://en.wikipedia.org/wiki/Enron:_The_Smartest_Guys_in_the_Room

chintan shah said...

Yep,I have seen the smartest guys in the room too.

chintan shah said...

This one gives me extremelly bad feelings

http://www.hedgefundintelligence.com/Article/2186590/Issue/71697/Canada-Commodities-rollercoaster-for-Canadian-funds.html?Task=Report&ArticleID=2186590&IssueID=71697

Dont you think its too small?

I am contemplating about Uk.

chintan shah said...

What I am trying to say is :
After stealing some code from connectu zuckerberg went to mountain view instead of miami to set up facebook.Because he knew that there is high probability of VC funding in CA compared to other locations for tech start ups.Now He can shift facebook's HQ anywhere from vancouver to dublin to tokyo.


Am i thinking in right direction?

pythagoruz said...

Yeah, makes sense to me. Zuckerberg was smart, he made out like a bandit.

chintan shah said...

I meant Miami===toronto and mountain view===london.

I laughed for 10 mins on this sentence:he made out like a bandit.


We must preserve our IP from Crooks like griffin,zuckerberg.

chintan shah said...

What amount can be said respectable for a start up hedge fund?

pythagoruz said...

For someone like us? $10-20M

For Wall Street? $10-20B

chintan shah said...

Yes,I agree with above figures.