Monday, October 24, 2016

I'm Betting No Sustained Fall Until After The Election

The Lion and the Cobra

By -

I confess I’m getting very impatient for some downside action. This damned market cannot seem to sustain a selloff, although I suppose I’m supposed to be grateful that we’re not lurching to lifetime highs anymore.

Every index is sporting the same two vital elements: (a) a broken trendline which began early this year (b) a cluster of recent activity, in some instances in the form of a triangle, which needs to be broken in order to really get things falling. Here, for instance, is the Russell 2000 showing the broken trendline (red circle) and the “stall zone” (tinted):
1022-rut
The same is shown for the Dow Composite, which has the aforementioned triangle pattern:
1022-comp
It wasn’t that long ago that mini-panics were becoming fairly regular, which you can see by way of the VIX:
1022-vixlife
For the past nine months, however, we’ve been in a stinking dry spell, without a single instance of a VIX getting even above the 20s. Indeed, the highest we got was only about 27 when the Brexit surprised happened, and since then (red arrow) it’s just been deathly.
1022-vixdeath
C’mon, planet Earth, can’t you throw Tim a terror bone? A surprise Trump victory? A nuclear attack? Give me something to work with here, people!