After the close of trading today and with the full view of various market indicators it seems the E-mini S&P could attempt a final leg up in the 940´s range which would mean the VIX would head down once again and complete a more complex bottoming formation, this time not on daily but on weekly time frame which would mean the eventual downturn will be on more solid ground.
A quite interesting market action we noticed today which we have already mentioned is the recovery the indexes had one hour before the close, and its no mystery to see this kind of wild market reversals occur, sometimes even just ten to twenty minutes before the close.
The only explanation for this type of action comes through a rigorous and careful real time monitoring of the VIX, VXO, VXN, etc... Below we show a 5 day intraday chart of the VXO from Bigcharts website that explains the sharp market rally we are referring to. The VXO was unable today to breakthrough the 30.5 resistance, even after two failed attempts it quickly headed lower.
Regarding the stock indexes, below we have a 30 minute E-mini futures chart that goes back to last friday, and if we take a look toward the right part of the chart we see the sharp fall which corresponds to todays market action. Within this drop we can identify the subsequent turnaround of the market near the close. Right now its Tuesday and its about 21:40pm EST and the futures are ticking up in fact it seems we are bound to have a positive open in Europe and as the E-mini continue to gain momentum to the US open we could have an extension of the late rally come through at least to the first half of trading tomorrow, at least until Europe closes at 11:35am EST. We are not so certain whether it might be able to regain all the lost ground within just one trading session, we will have to monitor the markets very closely all day tomorrow, especially the VIX and VXO.
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