Friday, January 30, 2015

Jan 30 - Major correction possibility back into play

In a strange way, the fact that we went up then reversed gains today was more bearish than if we had gone down straight.  Slowly but surely, buyers are beginning to evaporate from the market as the bounces are being burned off on a daily and most noticeably on an intraday basis.  SPY registered increasing volume and is close to exiting its consolidation zone.  Today was particularly ugly because the market struggled all day to fill the gap and upon doing so gave up the filled gap and more very quickly.

VIX has potential to reach 30+ and VXX could match November highs in the mid 40's.  Based on comparative volume, the market could fall an entire week before it reaches a bottom.  This puts VIX/ VXX at such levels.

$NYUD printed a major distribution day and these events are often followed by roughly a week of intense selling.  It is possible the market hangs on for another week, but if and when it corrects, I am looking for about a week of heavy selling to bring us to 1900 level in SPX.

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