I have no bias right now, but I’m curious – couldn’t you just as well say that if the market wanted to rise higher, it would have by now? Doesn’t that interpretation go both ways?
Absolutely!
There are always two ways to interpret technicals. Buy the breakout, or sell the top of the range. Buy the dip, or sell the weakness. This dichotomy is why we cannot trade on technicals alone.
Sentiment is the clue that tells us which way to trade the technicals. Currently sentiment and headlines have been exceedingly bearish, yet the market is holding up exceptionally well. That is a bullish sign because prices refuse every excuse to breakdown. All it takes is one piece of good news and we’ll explode higher.
The opposite scenario is when all the headlines are great and the crowd is gleefully greedy. When the market stops climbing under those conditions, that is when prices are stalling and about to fall.
Cannot get away from being greedy when others are fearful, but committing to large purchases won’t happen just yet.
The best trades are the hardest to make.
What about a low VIX? Isn’t that an indication of low fear?
2015 has given us the tightest trading range in 65-years, meaning the VIX is actually elevated given how flat the market has been.