Saturday, August 3, 2013

S&P 100 and Small Cap Volatility

The long term internal trend line that initiated the sell off in May is being tested again. On a cycle basis, I mentioned a few weeks ago that the first week in August was when the next top was due. With declining breadth and small cap volatility at weekly support, along with the OEX at resistance, the seeds have been sown for a 12-16% decline.  After the sell off, I believe there is enough evidence to support the yearly cycle low for the market in the Sept-Oct time frame. At that point, there should be one more higher high in the spring of 2014. After the decline starts, I'm sure more clues to the future will begin to emerge.
RVX Weekly
RVX Daily
I am now 300% short from /es 1684.50. IMO, this will be a move lower much like the summer 2011. Probably not as vicious a move lower but similar nonetheless.

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