(the following chart was published on 2.5.2012 in the Market Intelligence Report)
For the week ahead we are bullish but the charts above call for more selectivity and vigilance. We remain long and are looking for intraday chart signals for buying opportunities. However please understand that because of the circumstances laid out above, any significant negative news catalyst will have a magnified selling reaction within the stock markets. So what has transpired since? We see that the SR6 signal, based on volatility mathematics, circled on the chart worked out well. We had a warning of a bounce in the VIX well before the recent developments in Greece. We used this info to begin legging out of our longs this week and being more selective on new trades. The nice thing about where we are now is we have well defined resistance above around 25 (shaded red) and support below in said range (shaded blue). These areas represent the extremes in terms of support and resistance based around volatility. And, money is made at the extremes.
