Market Turning Points | Andre Gratian | 2011-06-12

From Safehaven.com:

Last week, the SPX shed another 29 points. This brings the index to a total decline of about 100 points in the space of six week. Is it done yet? Before we get into that, let’s ask an expert what kind of a decline this is. At the 1370 top, the VIX was at about 14. In the course of the downtrend, it reached a high of about 20. And last Friday, it closed just below 19.

Clearly, Mr. VIX is not too worried about the extent of this correction. During last year’s intermediate correction, the VIX went from about 15 to a high of about 48. If this is how the VIX behaves in an intermediate correction, we have to deduce that we are not in one, but only in an extended short-term correction period, and that the intermediate trend is most likely still up! Of course, the VIX could still wake up and forecast much more decline ahead but, until it does, we have accept what it is telling us and not dwell on what it is not.

Now, is it done yet? We can ask another expert: The SentimenTrader what it thinks, and its answer is: “I can’t tell you that exactly because I am not a timing indicator, but I feel that we are pretty darn close!” (We’ll see a picture of the “SentimenTrader” a little later on.)

That’s too vague! Perhaps we can get more specific answers, from our charts.

Continued

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