Market Timing Brief™: The Critical Signals to Watch

The Tells on this Market

Treasuries have rallied again and are testing the prior market timing consolidations in both the 10 year note and the 30 year bond.  The VIX (“fear index”) moved up in the downtrend.  The market is still fixated on the 30.16 VIX low I believe, so rising above there could trigger some selling.  It could prove a reversal point for the Bulls.  We won’t know until or if we get there.

Today’s SP500 Index close was just above support at around 1249.  The close was at 1253.30, so we are already nearby.  The banking index (BKX) is slightly below the August high.  If you see the BKX break down further with the VIX rising above the resistance level mentioned and Treasuries rallying through the prior consolidation, the SP500 will likely fall to support lower than 1249.05.  The other index to watch is the NDX (tech; QQQ). If it fails to regain its recent new high, again, the SP500 index will likely be selling off.

There is yet another “tell” on this market – the US dollar.  For this to be a small correction on the way to higher highs, Europe will have to improve its story.  Otherwise, the US dollar will continue to rise through the prior consolidation level through which it had fallen and move straight back up.  That market timing signal would mean serious damage to the Euro and all major global stock markets.

Of the pullbacks we’ve had to date, this one is perhaps the best place for the market to fail.  Why?  Because many have reversed from important resistance points.  I am not saying it must fail, but this is a place that could be  a pivot point depending on the flow of news.  Let’s hope Europe looks better on Tuesday than it did on Monday!

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Standard Disclaimer: Remember, it’s your money and your decision as to how to invest it.

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