We May Have Reached A Short-Term Bottom

Possibly, but this is still a faker rally. The CBOE VIX (^VIX) is a sentiment indicator that gauges fear in the market. I was looking for that 40 level since we seemed to get use to the 30 level as well as the higher lows it was making.

July 18 was when the whole naked short-selling craze set in and as you can see the rally was short-lived. Given the power spikes in the past 2 trading days, it is possible that the market can move to the 200-day MA. If the market does reach that level, I expect a total failure and a reversal to follow. If we get a -2 or more down day, the 2-day rally could possibly be over and a sharper decline would most likely take place.

Look for Monday’s trading as confirmation as to which direction the market is likely to go.

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