Market Thought… and a Black Swan
An argument for a continued upward push can be made seeing how the market is coming off of an oversold position. Especially for the Nasdaq via the QQQQ coming off of the SMAs and being oversold…
The SP500 is still seeing potential head wind, but a possible move to the 200 SMA may take place, depending on the psychology of traders next week. IMO, there is no economic catalyst at the moment that will drive the market fundamentally higher, but that is a ‘wait-and-see’ regarding the economic data.
What leads me to be bearish is the VIX. The level of complacency is too high in this current economic environment.
The VIX is at the low end of its long-term range within a bear market. The Vix is sitting on support and oversold. A possible move to 16 should not be ruled out, but I would feel very uncomfortable if it does.
We are approaching a complacent market, one accepting the slowing consumer stage of the bear market, but not fully realizing the slower corporate profits that come along with this stage. Also, a potential Black Swan is being ignored. Geo-political events are in an interesting place at the moment. So much so, I feel uncomfortable with the Vix going too low.
The Georgia-Russia conflict can lead to a scary domino effect of events. Obvioulsy this can be said about any conflict, but Russia decided to enter a sovereign state during the start of the Olympics (which is to symbolize 12 days of peace, irrespective of events). Then Poland gets missiles, ‘coincendentally’. We saw Russia react within the media, but how did they really react? Did they allocate resources to Afghansitan supporting the Taliban. What will the Russians really do to (or what move did they execute) to get back at the US for the Poland missisle? Then, how will the US respond? Will egos get in the way of economic development, and progress toward the worlds people? All I know is, this conflict gives me the ‘chills’ (pun intended 
).
