[caption id="attachment_466" align="aligncenter" width="500" caption="SPX"][/caption]
Another week has gone by and still no sign of the bull yet. Perhaps the smart money have begun hoarding shares? Perhaps the market makers are scheming for another run down? Who knows. It doesn't matter anymore. The fact is, I don't think we'll know for certain if a rally has occurred until it's staring us in the face. But that's fine. Don't try to pick the bottom. With the VIX at a new high of 96.4 last week, we could face another free-fall of prices on just a hiccup in the market.
[caption id="attachment_467" align="aligncenter" width="500" caption="SPX and VIX"][/caption]
On the intermediate term, I am still bullish on the overall market. I see the market will be more likely to be much higher than lower by the end of the year. I came to this conclusion from the observation of prices and volume this past 2 weeks. I made a post about monitoring the 3 banks before the CDS settlement for signs of trouble. Since then, we continue to test the support on low volumes on the S&P (see top chart).
However, we're on to a fast down trend last week with increasing volume. Next week would be interesting (which week isn't these days?) and Monday should offer a sign of things to come. The indices have closed on a new low this Friday. At this point, the bear is likely to make another dash.
Actually, I'd be more happy if we just get over with it and make a big time plunge next week. It's certainly better in the long run than this recent, prolonged, corpse-dragging process. That way, we can shake out the recent, short-term bulls and clear an upward path with little resistance.
As I've said, watch the action next week.
: http://traderpau.files.wordpress.com/2008/10/2008-10-24-spx.png : http://traderpau.files.wordpress.com/2008/10/2008-10-25-vix.png