Thursday, 11 October 2012

Main indexes also giving provisional warnings

With a third day of declines in the Sp'500 and the Dow'30, we are starting to see some provisional warnings appear on the monthly rainbow charts.

Sp' monthly, 6yr, rainbow

dow' monthly, 6yr, rainbow


Today was the first time we've seen a blue candle on the SP and the Dow monthly charts since July and August respectively. These blue candles might even change to red if we can break the 10MA - sp'1381, although right now, that sure looks a tough (and unlikely in October) target to hit.

As ever, what matters is where we close at the end of the month.

The bears should arguably merely be seeking blue candles for October on the bigger SP/Dow indexes, which will add to the 'early warning system', that is the Transportation index.

So, lets see if we can close October with the tranny sporting a third red candle, and ALL other main indexes with at least a blue candle. If that is the case, then it would indeed be a warning of trouble this Autumn.

My three red flags remain...

Transports, monthly close <5000 - achieved end September
WTIC Oil weekly <$90, which was achieved last week
VIX weekly close >20, this seems unlikely for at least a few more weeks.

Today was...interesting, lets hope Thursday will be even more dynamic, especially in regards to the VIX.

Goodnight from London