Sunday, August 22, 2010

The Tell

See update at the bottom.

Combine this chart with the HnS in the post below and you have a recipe for disaster.

I found this chart rather interesting. What has not happened that should have? VIX divergence, USB spike and the SPX becoming disassociated from the TNX all together with the telling (this time proactive and not reactive) spike in the USB. Volume fading away. My guess is that SPX falls to equilibrium with TNX and the VIX goes ape shit. I'd load up on VXX.
Now, to give the bulls their due, these divergences in the VIX have only crushed the bears recently. Thus, I have begun to believe the VIX at this time has been rendered useless in these manipulated markets. With the virtual certainty of the TNX continuing to fall, SPX should find it's "level" so to speak.
UPDATE: And for those of you that think the foreign markets may effect or relate to ours, the SSEC has gotten a bit ahead of the SPX (might not be as manipulated) and it is showing some nasty divergences and is possibly about to get away from our lovely market. Take a peek at 2008. See any similarities?