Trading the SPY and QQQ

[bbgold]

Morning Dave,
Those are some interesting charts. It is amazing just how much whiplash there is in the $CPC:$VIX chart. I am not entirely sure how I am supposed to interpret it? Should I be watching the point readings or the trend? Looks as though the MAs crossed positive the beginning of April and the the trend has been positive, higher highs and higher lows, since mid March. I am still not good at reading any of the $VIX indicators to determine what to watch for.

I used to follow the CBOE P/C ratio for a while. I believe that Steve on the MKTSS board follows it fairly closely. I agree on anything below .60 as a potential top but it is amazing how quickly it can reverse above 1.00 and signal a potential bounce. The one thing that I have found is that you can never be sure if the short term selloffs or short term bounces can turn into complete reversals or not. IMO the P/C ratio can work well for short term trades though.

As before, I still need to work on how to read the $VIX charts. I am a believer now in how the Bollinger band piercings can signal that the markets are overextended. I see that we might already have a BB piercing of the upper band already? It will be interesting to see if the $VIX SMAs can make a reversal here or continue their trend? It looks as though most of the failures of the $VIX SMAs have lead to short term corrections that did however lead to longer term reversals. I would be inclined to think that might happen again, a short term reversal that eventually leads to a longer term trend change. It will be interesting to see if the markets can retest the tops again. May or may not happen but it is a possibility.

Did you see the posts I put up with the TNX divergence from the Markets? The last time that happened was just before the October decline. No way of knowing if the same type of selloff will occur but I will still be cautious on the Long side.

Thanks for the charts Dave! Sincerely, Bob :^)