LN’s UCC’s Oct 15 Part 1

( * * * * *  CONGESTED CONGESTION * * * * * )

The US markets refused to buck down its current uptrend and continues to accelerate to the upside…

It is worthy to take note of the fact that when the S & P did the infamous bear trap circa Oct 5 when it hit lows of 1,075, volume was at all time lows for Oct 5 (bear trap day) and Oct 6 (continued reversal of fortunes day)…

This should be viewed as a positive… I reviewed charts again today, and I was thinking that the day the bear trap was made, volume should have been very very huge, since the volatility band was at its highest, but volume on the contrary was very low…

Now looking at the S & P , we are now touching my earlier top range of 1,225, and in fact we closed right smack at those levels… The congestion the S & P formed looks to be in waiting to break out mode, while the VIX (volatility and fear index) now at 28 seems to have broken down already from its congestion between 30 to 45…

Remember that a VIX at 40 depicts triple digit moves and swings in the DOW with volatility band intra-day ranging to between 3% to 5% moves…

Now with the VIX this low, we can safely say that markets have become calmer, and wild swings should be in the down gutters…

So what is the trade now…? I am looking at a break of the range that the S & P has formed, a more than two month range of 1,075 to 1,225… Higher lows at this point should be in the offing, targeting only to  a maximum of 1,180 to the downside for the S & P, while upside, we could be looking at 1,280 (the dreaded 200-day moving averages)…

Our closely watched DXY (US dollar index) also made a key reversal when it hit that psychological 80, when I thought that there was something wrong with the sell equities, and commodities, and BUY DXY and VIX futures trade at the pinnacle of the end September and early October when fear and the supposedly mighty meaty US dollar $ ruled the trades…

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