Markets – Macro – Technicals

New Year’s Eve Flush

Happy New Year everyone!

Markets finished 2014 pretty much in the same way they had been running all year: Breaking records of all sorts. The latest? A 20% jump in the $VIX on the last trading day of the year. Another “never ever happened before” event.

I hadn’t planned to trade as I had closed final longs the day before waiting for a new set-up. Per the 1999/2000 analog we have been watching we were mindful of sudden weakness being a risk factor and yesterday’s double top in the $IWM provided a well defined short entry which we were able to take advantage of in the member feed:

TF short

Clearly the end of the year and quarter served as a trigger for profit taking. Whether this will translate into more serious corrective action remains to be seen. Yet the move was steep enough to wipe out 7 days of previous price action and to lay to waste the Santa rally expectations many had counted on as evidenced by all the record $ETF inflows witnessed in just the recent days:

SPY 15

Still there are signs that this action may still prove positive for buyers in the next few days. For one the $VIX filled its recent gap much like it filled its October gap earlier in December:

VID D

New Year’s Eve’s flush not withstanding seasonality tends to be positive in the first couple of days in January at least:

NYD

And structure wise nothing has really changed for the $SPX as rallies in the past 2 years have thrived despite negative divergences:

SPX S

Note the advances minus declines closed at -404 which has actually been close to a bottoming signal in the past couple of years as well and, bizarrely, high/lows actually closed the day in positive territory:

HL

The monthly $SPX chart continues to show an overbought market closing above its 5EMA and 8MA as it did yet again in December. Yet the monthly MACD trends also show a market that is having an appointment with a negative MACD cross-over and, from the looks of it, this appointment is coming sometime in 2015 with the Ryder bull/bear ratio at a precariously bullish 0.06:

SPX monthly

If anything the final trading day of 2014 signals the promise of increased volatility for 2015 that we have been talking about here: Volatility Ahead.

For more information about our trade philosophy or on how to become a member please visit the About and Membership pages.

Advertisements

Tagged as: , , , , , , ,

1 Response »

Trackbacks

  1. Friday January 2nd: starting year with a bang?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

The material on this website is provided for informational purposes only, as of the date hereof, and is subject to change without notice and does not constitute investment advice.
Home | About | Disclaimer | Contact
Copyright © 2013-2017 NorthmanTrader
The materials on this website may not be suitable for all investors and are not intended to be an offer, or the solicitation of any offer, to buy or sell any securities.