November will be sideways on SPY with the first day of month down due to profit taking.
In Dec, QE will be shutoff but no crisis as SPY can get OB in Dec. There’s no taper or fiscal cliff to worry about.
Every big crisis occurs after QE ends: Jun 2010, Jun 2011. In 2012 we had a small crisis. Fiscal cliff was headed off by Bernanke with QE starting in Sep 2012.
In Jan/Feb, the big crisis VIX 21+ will hit in 1st 2 weeks of Feb. The economy will be bad coupled with QE off. The pain threshold of the Fed is usually a 15% correction or about 170 on SPY before QE is announced again. This will be the next big rebound to play.
Some new terms:
SPYgha – SPY GHA daily
VIXgha – VIX GHA daily
TLTgha – TLT GHA daily
The play will be TLT in Jan when VIX/TLT indicates a turn. Followed by a crisis in Feb and selling TLT/buying SPY on SPYgha. Sell TLT and buy SPY on the same day.
Reviewing 2014..VIX shows a turn on Jan 16. QE taper starts here.
And TLT showed turn earlier..
But pattern is more clear nearing the end of QE Sep/Oct. VIX starts Sep 22 after Fed meeting.
And TLT about same time..Sep 19.
The idea is VIX turns up in mid-Jan and momentum builds through a crisis when FEB pmi falls short.
Credit Flow Investor 