Market Bounce

Sentiment seems to have at least moderated recently. As you know, after last Friday's OPEX I'm looking for a bounce early this week, today may have been the start of that bounce.

 As I've shown in the past, the Australian dollar has had some predictive value for our equity markets, often diverging and giving an early signal. In this case, the Australian dollar has held up much better then the market, a possible divergence of importance.

 Above in Green is the CBOW Volatility Index or the VIX. In white are occasions in which the VIX has advanced only to snap back and start a rally in equities (SPY in in red). The VIX has an inverse relationship with the market typically.

 Here's a closer look at that snapback in which the VIX advanced, signaling what should have been a sell-off, instead the market remained lateral and the VIX has snapped back the last 3 days, but particularly today. This is another clue that we may be very near or at the bounce I'm looking for.

Historically the 50-day moving average has been very important, especially in cases of market tops, a rally to the 50-day average in white would be an ideal area to start looking for a downside reversal move and gives us a rough target of where the bounce could lead to.