Look at monthly charts of $INDU, $SPX, $COMPQ, and tell me the overhead resistance looks like butter we will cut through easily when the $VIX has already fallen below 12.
If we do cut up and into resistance and the $VIX falls to 8, what kind of fall should we expect? And yet, the $VIX would fall to 8 and the market would climb deep into resistance if we rallied now, sold off lightly into the 20-week low, and then rallied hard into 2005.
Perhaps the best compromise between the upward-pointing cycles and the already low $VIX is an up-and-down market--working off overhead resistance one bite at a time, trending generally up but more slowly than we have seen since mid-August. This, of course, would be the worst-case scenario for both bulls and bears.
Black