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Stock Market VIX Short-Term Bottoming Candle?....Bullish Big Picture

Stock-Markets / Stock Markets 2016 Mar 05, 2016 - 12:29 PM GMT

By: Jack_Steiman


So many questions. Not sure I have all the answers you're looking for, but we can do our best to try and understand what's taking place. The VIX has been in a stealth down trend off the top. Other than the occasional up day, it had not had the classic gap-down day that turned hollow at the end of the day.

This type of candle is often telling us it's about to try a reversal up for a bit, and, thus, the market would turn down a bit. Today we got that hollow candle off a long-term trend lower off a gap down suggesting the market should be ready for a breather. I can't say yet how much, and even if it'll materialize, but it should be based on today's candle. The oscillators on the VIX are quite compressed down. The stochastic's has actually spent days at zero. That's extremely rare, and tells of a stock market that has changed its stripes from more bearish to more bullish. That said, you can only stay down near zero for so long, and, with today's hollow candle, it may be time to unwind up a bit, meaning the stock market should be ready to sell some.

Today we saw the market blast up pre-market after a better-than-expected Jobs Report. Roughly forty-thousand jobs were created. That's more than expected. The S&P 500 was up nearly ten points, only to see it all go away at the open. After opening up a bit, and then falling to red, the market blasted yet again and spent the majority of the day was moving higher, before cooling off some as the day wore on. This is what allowed the VIX, I spoke about, to print a bottoming stick. The rally has been stealth in nature with the bulls afraid to miss out. The bears have been running to cover, and naturally that has helped the rally, but that's normal protocol for any market rally.

Froth is back in style. The market moved much higher than all the bears thought humanly possible. You can feel the desperation they're feeling. Begging for some hope, and maybe the VIX gives them some, but there is nothing bearish taking place on any of the daily index charts. Healthy, powerful oscillators abound. Impulsive action both in price, and those important oscillators, including MACD's, stochastic's, and RSI's. All of them joined in together to create some very nice looking, daily, bigger-picture charts the bulls can feel hopeful about. So today does give the bears a drop of hope, but the bigger picture is still looking more favorable than not, although let's never forget those monthly charts which still say breaking out above 2134 won't be an easy task whatsoever.

What may be unfolding is a bigger picture bulls dream. We may be spending quite a bit of time this year swinging back and forth with no one in real control for more than a short stretch of time. This will allow the last headache for the bulls, the monthly charts to unwind slowly, but surely without any major price erosion. That's always music to the ears of those bulls. The story is still uncertain, but if those monthly charts are hurting the bulls then the daily charts are hurting the bears, thus, a standoff would be perfect as we swing about for some time to come. The more we do that the deeper those monthly charts will unwind and set things up down the road for further bigger upside for the bulls. But that is probably sometime away. It should not be a near-term situation. In the mean time we take it day to day and try to find entry. We don't want to chase strength, but the trend is more friendly overall for the bulls. Let's hope we get some unwinding to buy in to soon.


Jack Steiman is author of ( ). Former columnist for, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

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© 2016

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

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