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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
* My posts are also re-published by several other websites and I have no control as to when their editors do so, or for the accuracy in their editing and reproduction of my content.
* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...

Dots

...If the dots don't connect, gather more dots until they do...or, just follow the $$$...

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Paris

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Thursday, July 19, 2012

SPX:VIX Ratio Pair Headwinds

I've drawn a Fibonacci retracement on the Daily chart below of the SPX:VIX ratio pair and have identified a potential Inverse Head & Shoulders pattern.

The first external Fib level of 127.2% at a price level of 92.30ish happens to lie at a confluence/apex of trendline resistance...just above current price.

If the SPX is to move higher, it will have to capture this level and remain above...in this regard, it will be important that the neckline hold at 82.50ish.


However, as can be seen from the Quarterly chart below, that won't be an easy task, as efforts to move much higher since 2004 have been met with profit-taking and choppiness.

Unless some kind of major liquidity injection is forthcoming into the markets soon (e.g. cash on the sidelines), I expect more of the same (profit-taking and choppiness) at current levels on the SPX. However, that will depend on market participant confidence, which seems to have eroded.