""... Volatility ($VIX) continues to decline as well, although it has
reached a plateau lately (Fig. 4). A declining $VIX is bullish."
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Bearmove...
Friday, the VIX broke to the downside to new lows for the move taking out what had appeared to be a bottoming process. The selling which had come in the previous few days barely budged the VIX, was on lower volume, and overall looked more corrective than the beginning of a downside leg for the markets. In my opinion, AG was able to contain the selling (both in the markets and finally in the $USD) and will now make another attempt to drive the markets higher and initiate a new upside leg to the markets.
He has no choice but to continue to drive the markets higher or we will face deflation and recession, so I look for him to provide some support to the $USD as he did Friday at least for while. It is US policy to let the $USD fall but he cannot afford a rout as seen lately or it will spread to the equities markets as well. There are no guarantees that his Greenspan Gambit will be successful, and it could be overwhelmed at any time by the fundamentals but as I said, he has no choice but to continue the attempt.
The markets are in a critical juncture now just below the highs, and this could be the end but the relative ease with which the selling was contained and turned back to the upside indicate to me that another push here has a good chance of succeeding. The faster he can get a new upleg underway, the more shorts will be trapped, so I expect him to start early next week barring bad news over the weekend.
Just my opinion, though, guaranteed as always to be either right or wrong.
mlsoft
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