PM

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Finding a channel and Fibonacci grid puts the entire messy disorder of a random number generator into perspective. Don’t ask for miracles. Imagine the possibilities while looking backward:

1. The RUT hastens its speedy decline past the channel support and 23.6% to reach the 38.2% line. This seems likely but not quickly. If this did happen quickly, the market’s correction will be steep.

2. More likely near term is that the RUT consolidates for a spell.

3. The RUT rebounds to test the 20 DMA as resistance/support. This could happen. As a contrary indicator to myself, we might say this is the most likely.

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Some friends of mine made a lot of money last year exploiting the difference between the cash and futures prices of volatility. The 12/28/2012 chart above was dynamite. The chart below is our current one, and it is far more pedestrian. Of course, once things settle a little and the sequester business is handled, we might see the VIX back at 14 or less.

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They offered me the office, offered me the shop
They said I’d better take anything they’d got
Do you wanna make tea at the BBC?
Do you wanna be, do you really wanna be a cop?
Career opportunities are the ones that never knock
Every job they offer you is to keep you out the dock
The Clash

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