Charts and Commentary

By: Marty Chenard | Fri, Dec 8, 2006
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I will keep it simple and to the point today, because I am on my honeymoon in Mexico.

Below is a long term view of the VIX, Volatility Index.

Last year, I observed that the VIX had been going through a concentric circle pattern with precision ... see chart below and remember that when the VIX moves up, the market moves down.

First the first time since 2003, the VIX broke below the circle in September which meant that the market perceived lower risk and that it would move higher. This was accomplished through huge M3 injections by the Fed as they tried to stimulate the economy so we could avoid a recession. (This VIX pattern precisely held support a total of 11 times until September.)

This took the VIX "out of balance" and balance is always re-established given enough time. If you look at the chart below, you will see that we are at the juncture of an important testing point where the market could face considerable downward pressure.

If the Fed does not significantly increase M3 in the next few days, market risks will rise substantially.

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Marty Chenard

Author: Marty Chenard

Marty Chenard
Asheville, NC 28805
Tel: 828-296-1200

Marty Chenard is an Advanced Stock Market Technical Analyst that has developed his own proprietary analytical tools and stock market models. As a result, he was out of the market two weeks before the 1987 Crash in the most recent Bear Market he faxed his Members in March 2000 telling them all to SELL. He is an advanced technical analyst and not an investment advisor, nor a securities broker. is dedicated to Stock Market Investors who want the best information on stock charts, stock market trends, stock market timing and technical analysis.

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