DOW, SPX, Germany and VIX status 7-18-2012

Dow Jones and SPX has now reached the upper resistance levels of their Medium Term Downtrend resistance. 60mins also shows some negative divergence forming..

In order for US Markets to edge back higher, must breakout of 12800 for DOW and 1364 for SPX. And defend the 12500 and 1334 levels.

Short Term: Uptrend

Short Term Elliot Wave Count: minor wave iii forming of Major Wave 3 of Primary Wave III. Or a possible Bearish B top of ABC Corrective pattern of Major Wave 2 of Primary Wave III.

Medium Term: Downtrend channel still continues.

Long Term: Uptrend still intact. (tho Ultimate Monthly 50MA and 200MA near to cross)

China is still the weakest Emerging Market in terms of ROI for the past 2 years. Its -61% from its 34xx peak last 2010. And attempting to break even lower into 2009 lows. Must hold 2150 support line,else 1600-2150 has long way to find support.

Germany on the other hand is looking good SHORT-TERM. Its short term uptrend channel is still intact with a 5% trading range channel. Germany and other European nations are making things ready to produce their Q2 2012 GDP numbers,maybe by end of July up to Mid-August. Must expect more price reaction,especially if Germany falls to negative GDP territory again.

Short Term: Uptrend

Medium-Long Term: Downtrend at Major resistance(3yr) at 7000, then 5yr resistance at 7400.

Strategy: Looking to slowly turn to cash when Germany reaches 6800, or to Short it as well as Global Equities when it hits 7000 where 3yr downtrend resistance resides.

VIX is starting to reach levels where “too bullish” levels are retraced. VIX closed at 16.48, near the 12-15 levels, where people became too bullish into the markets, sometimes VIX is a good indicator when to sell, as VIX computes for Volatility Index of the Markets.

Examples where VIX hit the range and Market became short term/long term peaks:

April 2012 – 13.66 (DOW at 13336)

April 2011 – 14.27 (DOW at 12876)

April 2010 – 15 (DOW at 11258)

Dec 2006- 9.39 (Dow at 14xxx)

Mostly April huh? “Sell in May and go away”