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Gregory Mannarino
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I started my financial career working for the securities and trading arm of the now defunct Bear Stearns before thedot-com bubble. I am an active trader of the capital markets. I have published several books pertaining to finance, global economics, and equity trading; My most recent book is... More
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TradersChoice.net
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Money Matters.
  • Despite The Recent Stock Market Sell-Off, A New Move Higher Is Very Likely. 7 comments
    Aug 5, 2014 11:53 PM

    With all the rhetoric about a major downward move in the US stock market continuing, there is evidence that a major move higher is more likely.

    Let's first look at a chart of the Dow Jones Industrial Average (chart below). Focus on the time period of mid April when we had a drop in US equities, (see circled area).

    (click to enlarge)

    Below is yet another chart, this one is of the VIX. Observe the peak at mid April then the drop off, stocks rebounded. We are also seeing a spike in the VIX now.

    (click to enlarge)

    Now let's look at the CBOE SKEW index (see chart below). We are at levels not seen since the mid April sell off which was followed by a strong rebound in stocks.

    These charts seem to be telling us now is the time to be buying stocks. What's you take on this?

    (click to enlarge)

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Comments (7)
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  • beyondD
    , contributor
    Comments (3) | Send Message
     
    While I don't trade the DJIA my self. I just see this from a non technical view i.e. : A free fall in the DJIA wont come when the official narrative about growth in the usa economy still stands. Right now the bubbles haven't float to the surface to crack the confidence story. what it feels like to me that this is a move for a slighter cheaper price to boost it past 18000 in the upcoming months. so I predict some sideways action till next week. Then yellen or some other fluffy cheerleader will have a another speech to boost it back up to previous levels.
    6 Aug, 09:03 PM Reply Like
  • beyondD
    , contributor
    Comments (3) | Send Message
     
    While I don't trade the DJIA my self (a small amount of my funds are used for the DIA) . I just see this from a non technical view i.e. : A free fall in the DJIA wont come when the official narrative about growth in the usa economy still stands. Right now the bubbles haven't float to the surface to crack the confidence story. what it feels like to me that this is a move for a slighter cheaper price to boost it past 18000 in the upcoming months. so I predict some sideways action till next week. Then yellen or some other fluffy cheerleader will have a another speech to boost it back up to previous levels.
    6 Aug, 09:03 PM Reply Like
  • beyondD
    , contributor
    Comments (3) | Send Message
     
    While I personally don't invest heavily into stocks other than a little bit of DIA with a tiny % of my funds. The way I see this from a non technical stand point is that: The DJIA wont go into free fall when everyone sees it coming. It feels to me that this is a set up to force it lower only to go all the way back to 18000 in the up coming months. The reason for that is that the story of (usa recovery) hasn't been dealt a major blow. By that I mean there isn't a bubble that has come to the surface and exploded in a way that the media has to report on it explicitly. So what will probably happen is that it might be sideways or slightly corrective for this week but be assured that (Good) economic data will boost this back up and if that's not enough then yellen or any other fluffy cheerleaders, will have a speech next week to make sure that all losses will recover 100%.
    6 Aug, 09:04 PM Reply Like
  • Toxxmaster
    , contributor
    Comment (1) | Send Message
     
    Hey thanks for the info dude! I'll load up on some long nasdaq contracts.
    7 Aug, 01:59 AM Reply Like
  • HauteStock
    , contributor
    Comments (4) | Send Message
     
    Yes, I believe that price could pass through the current demand zone, as it has been hit at least three times before so it could easily head down to the next zone which you have marked, it is more fresh. I don't try to guess the direction, I just try to identify zones where prices will turn. If it hits that lower zone, I will be a buyer.
    22 Aug, 02:17 AM Reply Like
  • HauteStock
    , contributor
    Comments (4) | Send Message
     
    Price is at a demand zone that has been hit several times already so the next demand zone that you have marked is the next logical place to be a buyer if it gets there. I don't try to predict where prices will go, just the zones where I'll be a buyer or seller.
    22 Aug, 02:17 AM Reply Like
  • HauteStock
    , contributor
    Comments (4) | Send Message
     
    The February demand zone is the best place to be a buyer.
    22 Aug, 02:18 AM Reply Like
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