Tuesday, December 7, 2021

More Downside Later Is Still The Favored Option

EOD: VIX stopped almost exactly at it's gap up from 11/23-24 so it looks like it will very likely close it perhaps after a pullback in the general market and then a final push up.

1:26pm EST:
 Breadth is extremely overbought and not likely sustainable. A pullback most probably will occur soon prior to the final push up which may take it into the week ending or a day or so either way. Weekly breadth even at these extreme daily levels remains depressed. Any pullback in breadth into Friday or thereabouts will keep the red signal line attenuated deep in negative territory. It would take more than a few major weekly breadth improvements to pull it out.

Original post:
A turn signal did print at the close on 12/6/21 however, it was less than optimal at 82% but of sufficient impulse to keep the upside moving. The overriding concern is that the relationship between UPRO and SVXY as shown below appears to have a disconnect. There is another short-term half-span time target for today through 12/9 +/- so there may be an event around these dates [SP-500 high / inverse volatility high or an accelerating decline]. If the downward moves are to resume, the price point is getting closer to a likely zone relative to the previous acceleration candle on 11/26/21. It is not required to turn there but that area should be watched for a potential large resistance to appear. Upside breadth is pegging itself to extreme levels again so better to stand aside and let the time targets come and go and see what reacts, if any.

Note that the 2020 top had very similar movement patterns where the pivot was almost completely retraced in volatility derivative VXX prior to more downside. Not suggesting this is a terminal top but there are opportunities for this to morph quickly. Patience is required right now especially considering the set up that is shown on the chart.

The bots will flag here when they see a top. (1/25/202/20/20)
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