Stock Market Early Shorting Opportunity

By: Anthony_Cherniawski

This may be an early entry opportunity for shorts, since we may see SPX retrace all the way to yesterday’s close. This would be considered to be super aggressive, since the battered VIX isn’t registering any signals, yet.

I believe the VIX is being suppressed, in order to prevent investors to properly hedge for the decline. This would also discourage short-sellers, who rely on the VIX for their signal. This portends a very deep decline, since there is virtually no hedging and very little short-selling, which would provide a bottom for this decline as short-sellers take profits.

This may be Wall Street’s version of “herding” investors into risk products as they exit and go short themselves.

NDX opened with the largest gap down since January this morning. It is bouncing back to its 2-hour Cycle Top at 4652.50 where it is likely to find resistance. This is often a good short entry position, since the index may not exceed that resistance on the next retracement.

The Hi-Lo Index is moving impulsively lower, despite the bounce in the SPX. Market Breadth is decaying, which gives us even more confidence that this decline is the real thing.

Regards,

Tony

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