Fair warning given - 26 October 2012

As of yesterday's market action, the previous signals are being confirmed and yet again and again...

Let's look at the charts...

S&P500 futures (ES)

The weekly chart had given a SELL signal last week and this week confirmed that signal with a bearish candle. This weekly bearish divergence is in the process of evening itself out and is likely to bring more weeks of bearish sentiment.
The daily chart had a minor Sell signal and completed a price action trend reversal pattern, mentioned previously. Price then held at 1400 support for a couple of day and broke support early today (26 Oct 2012). The MACD is currently crossing over bearish. Although a steep decline, mostly due to earnings, the ES has a chance to bounce and I suspect might reach 1375 by early next week. IF 1360 breaks and holds 3 days below that level, that would be the last line and signals a major change in the primary trend.
At this point, there are bearish news, but not major news that would rattle a steep selloff - YET.


VIX/VXX

Looking at the VIX and VXX charts, a very nice setup apepars.
The weekly charts show an obvious bullish divergence and the daily chart corresponds similarly.
The weekly VIX chart has a BUY signal and the daily chart recently had BUY signals, with MACD bullish crossovers. In the VXX daily chart, price bounced off a long term support, with a BUY signal followed by a gap up. Making a new recent high confirms the momentum of the volatility, correspondingly the ES will be at lower levels.
What this means is that it is that it is time for the next volatility cycle. The fun begins...



TLT

Earlier mentioned, there is bearish news, but there is no panic news. And we see this with the TLT charts as there is no "flight to safety" in the recent market rundown. Watch for the breakout or breakdown, and this should give an indication. THIS is what I have been talking about looking out for the triggering news.


USD futures / DX

The USD is condolidating and is meeting some resistance. Again, breaking out above 80.4-80.6 would be a corroborating sign with TLT rising. Watch this chart closely.


GOLD futures

Quite clear that Gold, even after QE3 announcement fell out of favour. It peaked out and this time is likely to be looking for its 200MA about 1660. Last week saw SELL signals given in both weekly and daily charts.



Crude Oil

Clearly in a downtrend, Crude is intermediate term downtrend, looking for support at 82.60. More down days to follow soon, even as a bullish divergence seems to be forming in the daily chart.


IF there is a time to pay attention to the markets, it would be now.
Stay well & safe.


The MadScientist
26th Octobner 2012

Note: ALL material posted here is from my personal opinion, and my opinion may differ or change without notice. These do NOT constitute as solicitation, investment nor financial advice. By reading the materials presented here, Readers acknowledge the awareness that the materials are intended for educational purposes only. For investment(s) advice, related decisions and/or actions pertaining to investments, always consult your own qualified financial advisors, brokers, etc.

Charts are from TD Ameritrade Thinkorswim platform