Tuesday, January 24, 2012

IPM Turn Window - January 24, 2012

As mentioned previously, market has continued to rise above 1285 level. However, the interesting thing is that we recently got a Vix based sell signal. Last time this signal was generated was in late April 2011 – days before the market topped at ~1370 (SP500). This observation takes on even more importance when viewed in context with the broader over-bought condition and the market optimism, prevalent across the board. This kind of sentiment backdrop does not result in sharp rallies; instead it is a harbinger of market declines.

This background brings us to the current IPM turn date. In the last post, it was mentioned that the next turn date was within 2 weeks. After re-running the model, following outcome was achieved.

According to this analysis there are two IPM turn dates in close proximity with each other. The first date is tomorrow (1/25/12). Interestingly, this date coincides with the Federal Reserves’ meeting. With the market approaching its 2011 highs (DJIA and Nasdaq 100), optimism being elevated and Vix sell signal, it will be very interesting to closely observe the market reaction to the upcoming turn date.

Furthermore, there is another turn window in the next few days. This means that we could be in for choppy market action. 

1 comment:

  1. I really want the market to come down so i can do some buying. I've been waiting in the sidelines like a champ for the second time because i missed the rally again. What's up with Netflix too? It's 20% up???


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