Credit Flow Investor

In order to go, a daily GHA at the open is necessary AND VIX fall below 17.3 based on yesterday’s close and possibly below 18 tomorrow. The red bar should shrink the day before.

Yellin talks on Friday so market could turn either Wednesday or Thursday.

Last time VIX this high was June 2012.

Yesterday could be bottom based on the 200 dma crossing… -$1.60 below the 200dma same as Nov 2012. Rebound could start today… BUT target would be 196 by Oct 31 on this basis! It will be a slow moving rebound. On the plus side…no fiscal cliff to worry about here though and inflation very low and falling so new QE can be announced.  However, Nov 2012 was also when new QE was announced.

VIX over 20 is peak of storm (it only lasts 1 day)…storm passes buy Monday at open if market up and VIX falls back …

After VIX hits 17 or 20, buy when VIX falls below the 12dma which is 14.5 at this time. If below the line at the open you can buy, otherwise check at the close and buy at the open the following morning (if below the 12dma).

There’s no GHA yet.  The VIX needs to be well below (1.5-2 points) the 12dma and you need GHA daily.  Lets’ wait for payrolls tomorrow morning (open) to see if GHA occurs. If market still down on Friday, most likely Monday at open will be GHA.

The VIX is now rising and ROC is –

so wait for PMI day Oct 1 for a GHA (green HA bar daily at the open or close depending on strategy).

ROC now –

VIX rising look for 17..

Inflation also falling again setting up a strong rebound! Below is the YoY change in gas prices strongly correlated to cpi.  I also checked gas buddy and it is flat!

I added a page called General Policy Comment.  It is next to ‘Home’.

When – is achieved, watch for VIX/GHA

Should cross to -ve in October..then watch VIX/GHA

Looks like ccpi on downtrend again. See attached…

But I want to see what it actually says on Wed.  Gas Buddy and gas price change YoY also indicate little inflation…August was -2.4 indicating downward inflation pressure

So looks like a SPY rebound play 8-11d after Fed meeting Sep 17.

Monetary stimulus will continue as inflation is tame and consumer spending is flat. Income actually edged down. So any pull back in SPY is a ‘Buy the Dips’ opportunity.

see http://www.bls.gov :

The ROC has fallen as well as gas buddy from late June. This is the first ROC- event since April. The best rebounds occur after a -4 ROC event.

Gas buddy has fallen and VIX has risen and now falling.  Rebound is too small though 192-198 is only a $6 run total.

CCPI never achieved 2.0 (see link 5 on side) and is falling again so TLT was never a play.  SPY rebounds are ahead as inflation falls off from 2.0.  Let me quote Spitznagel again:

“Fed can keep spending as long as inflation stays low”

Inflation surge appears to be over…

The best momentum for a SPY rebound starts Sep 2 when pmi is announced. SPY will rebound before then BUT the uptrend starts Sep 2 if pmi good and GHA in the morning.

Always wait for econ data to confirm the uptrend (econ data is pmi and payrolls basically the first week of month).