Monday, January 27, 2014

The market will sell off when this happens..

Based on my VIX call, whereby I expect to see the VIX index hit 10 before the onset of the next major risk-off downturn – and beyond the very short term (point "2" above) – I think there will need to be more risk-on over the second half of Q1 2014. 

By the time we get into April +/- a week or so, I expect the VIX index to have traded down to 10 and, during this expected risk-on phase, I would look at 1850 as an initial S&P target. 

Upon a weekly close above 1850, I would not be at all surprised to see a strong risk-on move over the second half of Q1 and into April, taking the S&P into the 1900s, perhaps as high as 1950. It is worth remembering that blow-off parabolic spikes into a meaningful top tend to surprise in their "strength".