Today the markets rallied and closed solidly in green. However I have few concern regarding the coming uptrend so eagerly awaited by the bullish small speculators.
- The VXO is in 20s. All past major corrections have ended with VXO in the range of 28+.
- If we look at the weekly chart of SPX and put a 75 simple moving average, we shall see that from 2004, all corrections have ended near or below 75 SMA on a weekly chart. By that reckoning, we still have a fair way to go.
- The money flow was very negative.The Block Traders sold in the strength in the last hour. If past is any indicator, normally the next day is a huge gap down day.
- The CBOE market data shows that the retail investors have turned bullish.
So I am not holding my breath for a stock rally yet.
