Tuesday, 19 October 2010

Boy (and girl) plungers keep watching this top building process

It looks like the topping process is coming to an end and the sell off, TMN is waiting for, will materialize soon.

As per TMN's previous post [boy (and girl) plungers, start your engines: equity market sell off imminent], the VIX 18 level has triggered rewarding sell offs in the past (1 and 2 on the chart) and this time, so far, looks no different. All that remains to be seen is a close above the middle BB and break out from the descending wedge.

                                  click on chart to enlarge

The NYSE advance-decline issues have been in an upward channel with the moves unfolding into 4 waves. Waves 1 and 3 marking upward moves while waves 2 and 4 marking corrections.

It seems the NYAD has finished its 3rd wave up and we have already entered into the corrective wave 4. TMN thinks that the chances of NYAD correcting back to the lower trend line are significant.

                             click on the chart to enlarge

The next few days are definitely going to be extremely interesting and TMN will be paying close attention to the NYAD and VIX charts for a confirmation that a sell off is underway.

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