HOW LOW CAN WE GO

The question is how low are we going to go and the answer remains no one knows. The markets are oversold and were oversold last Friday so oversold can and does get more oversold. Rumors abound about a 50 basis point hike by the Fed at the next meeting and who knows what tomorrow's rumor may be.

The VIX continues to rip higher and is now more than 25% above its 10 day SMA. Usually market declines come to an end when the VIX goes higher than 5% above its 10 day SMA.
I also saw a note on Minyanville.com today that Dick Arms's ARMS index was more oversold on a 5 and 10 basis than it has been in a very long time. The 200 day SMA is not on this chart, but note that it is only about 70 cents away at 125.5. It will be interesting to see what happens when/if we get there. Back in October of 2005 we knifed through the 200 SMA and then went right back up and left it in the dust.

This market now has me worried as none of the buy signals have worked except for brief temporary bounces and I have sold many of the ETF's I recently bought. If the market acts better I can buy them back, but for right now capital preservation is key.