Inflation?

Today seemed like it was in slow motion, the market was very boring until it started dropping and until I got a look at that huge decline in the VIX today. Note that the VIX generally trades inversely to the market so when there's a peak in the VIX and it turns down, the market rallies and when there's an extreme low, the market sells-off, today qualified as an extreme low.

I placed vertical trendlines so you can see the relationships and noted how the April VIX area looks similar to recent VIX activity.

One reason that this may be happening (thanks to a good friend who sent me an article), capacity utilization is rising, commodities are rising, rents are rising, chances are core CPI will rise and we will have inflation. We'll have inflation in a market that has a lot of worries (fauxclosure gate, jobs, currency wars, possible trade wars, etc) , but certainly no improvement in job growth, this is a worry. When you pump more money into the system, you make it worse. So traders may be looking at this recent trend in capacity utilization=higher inflation=less QE in the markets and according to GS, QE2 is already price into the market, anything less then what is expected will crush the markets. Bonds have priced in over a trillion of QE2.

In any case, back to the markets.  I mentioned in the comments that if distribution keeps up in the 5 minute charts as aggressively as it has been, it will make it to the 10 min chart which has bigger implications, and so on. Here are the charts from today..


OK-sorry, I'm having problems with GOOGLE uploading images, I'll get them up as soon as it's working again. In any case, the 5 min continued down to make a 3rd consecutive low in a leading divergence, which has sent the SPY to a fresh new leading negative divergence low on the 10 min and the QQQQ in a leading negative 10 min divergence.

Another chart I wanted to post was the EUR/USD chart, the Euro continued losing ground against the dollar after the close. In fact the Euro is now falling into last week's  lows, it may surpass them. This is bad for equities.

Tonight I listed a lot of commodity based trade. If you enter more then 1 short or long, please look closely at what the company does. If they are too closely correlated, for risk management's sake, they should be treated as a single trade. In any case, commodities certainly trend much better then stocks. You'll find long, shorts, pullback trades, limit order trades and trades for execution at market open.

I'll keep trying to get those charts up. But you'll see, the outlook is not good. Even without 3C, the volume today was even lower then the Dow's volume on Friday which is to say it's lower then anything we've seen n the last 190 days -you have to go back to December of 2009. Today's trade showed ZERO follow through-not a good sign.