Thursday, February 17, 2011

17 February 2011

$TED Rising



 I made this indicator to use price and volume to determine the strength of moves.  Granted, everyone knows that there has been no volume in this rally, but this really shows it.  Essentially, it multiplies the magnitude of the volume by the magnitude of the price move and over time sums up this amount (a negative day subtracts, a positive day adds).
 Longer term view of above.  Essentially, gotta look for divergences between price and this indicator.

VIX got rejected by the 50 day today, but I think that could be a good thing because if it continues to consolidate more, the chances of it breaking strongly upwards only increase.

 Still creeping higher so stay long until it trends down.  The TSV (middle chart) is still trending upward, but getting towards high levels.  It certainly seems that this rally will not end until the exact date POMO QEII (June) ends.  However, I seem to think that would be too easy.  People will start anticipating that and bailing early.  After all, the primary dealers will want to use all their hot money to short the market on the way down too.  Also, it is clearly not as strong as it was the previous two rallies. 



"Paper money eventually returns to its intrinsic value - zero."
-- Voltaire, 1729

"Ponzi’ finance units must increase its outstanding debt in order to meet its financial obligations. A transition occurs over the course of an expansion as increasingly risky positions are validated by the booming economy that renders the built in margins of error superfluous - encouraging adoption of riskier positions. Eventually, either financing costs rise or income comes in below expectations, leading to defaults on payment commitments."
-- Hyman Minsky

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