Many fund managers and analysts are calling for much higher prices in the market near term, medium term, and long term, extremely bullish sentiment. These are the ingredients for making a top in the market. We have very high sentiment, overbought oscillator, and some other technical clues illustrated below.

The VIX is the ticker symbol for the CBOE volatility index, basically the fear gauge and right now it is indicating very little fear.

The chart below is a comparison of the VIX and OEX. OEX is the S&P 100 index. The candlesticks represents the VIX and is currently sitting on long term support. The purple line represents the OEX or S&P 100 index.

Notice the lows in the VIX and the market highs within the translucent ovals noted on the chart.

Currently the VIX is breaking above down-sloping trendlines suggesting strength. On the bottom of the chart is a momentum oscillator and is showing momentum is waning, suggesting a reversal in the VIX. I have also drawn a line as support for the oscillator showing a bullish divergence.

Bullish on the market? Tighten your stops up. If you are shorting the market, be mindful of the changes in trend dates. All sent out to my subscribers with upside and downside targets.
Above all, protect your capital and manage your trades.

Joseph VanDerveer is the Chief Technical Analyst with 8 years experience in the trenches trading the markets with a brand new website and service at www.doubleplayoptions.com

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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