S&P Analysis for this week!

My was it another interesting week on "Wall Street". Bailout plan was passed and the markets dropped.. WEIRD... huh... NFP came out and it was crap showing that the economy still sucks... People I think are starting to realize that we are getting ourselves into tons of debt to save a bunch of cronies on Wall Street but that isn't going to save main street or the economy and frankly is going to make things worse in the long run. But with that said LETS LOOK AT THE CHART!



Okay so what we can see here is that obviously not much has changed from when I did my post on the first EXCEPT we made a new low but the 1100 level again held. The next big level of support should be the fib level at 1077 so IMO it looks like we might be in for a bounce. The RSI has hit oversold for the first time in a long time and the MACD is about as low as the previous huge low. I'm looking for a retracement at LEAST up to the bottom of the channel at 1150 or up to the fib at 1170 (which is a very strong resistance level now) and then we should resume the downward trend. This was a HUGE down weak for the market down almost 10% in a week there HAS TO be a retracement back up but we live in crazy times so who the hell knows.

Long term: Going lower breaking Fibs
Short term: Going back up to the 1150/1170 level as the 1077 fib level should hold to get us back to the downward channel.

Strategy: Buy puts on a bounce and wait for the VIX (chart below) to come back in line (a little bit)

VIX:


The VIX is a measure of the CBOE option volatility and is a general indicator of overall market volatility. When the VIX is high option premiums are high when it's low premiums are low. The VIX is basically a measure of fear and thus when the vix makes highs the market is down big when it goes lower it's going up.

Looking at the VIX it can be seen that it is at levels not seen since the last bear market. It's just crazy volatile and options are very expensive with implied volatility >70% on most near term expiry dates on INDICES! not even stocks on the S&P russel 2k WOW. What I'm looking for is for the vix to come back down to less than the green line at about 30 which should coincide with the market coming back up to the channel/fib I discussed earlier. If the market keeps going lower the VIX is going to shoot to the moon.

TA does not work on the VIX never play the VIX (learned this from the guys at Think or Swim THANKS!)

Overall: Look for an up week on the market to calm people down a bit maybe even an up 2-3 weeks but then look out!

Jason