The Market is Exhibiting Selling Pressure and Technical Divergences


Author Larry Berman

Posted: 29 Mar 2012 reposted from etfcm

More than any time in the past few months, the market is exhibiting some selling pressure and many technical divergences—but this does not mean go out and sell everything. VIX is starting to get active, but the premium in the futures curve makes it virtually impossible to determine the delta on using a VXX hedge, so we are still avoiding using this for now.

The bigger break other than an overbought cooling comes if the S&P 500 falls back below the 1370 breakout and the rising trendline, which is tracking just below the rising 50-day average this week in the 1360 area. Do not look for the spot VIX to jump much until these important support levels break.

Seasonality is not bearish for another six to eight weeks, so there is room for all the technical divergence we have noted in recent weeks to fester, rot, and continue to decay the internals.

 

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