Tuesday, April 19, 2016

VIX Volatility and SPX S&P 500 Daily Charts VIX Prints 12-Handle

The volatility continues lower providing bull fuel for higher stocks. The VIX prints a 12-handle as the bulls light cigars and sip Fed champagne. The red circles show significant market tops due to lack of fear. The green circles show market bottoms when there is rampant fear and panic and the blood is flowing in the streets. What do you think will happen?

Market bears got nothing until they push the VIX above that 200-day MA at 18.65. Note the death cross on the SPX chart back in August of last year. The bulls tried to create a golden cross to begin this year but failed. The 50 is coming back up again to the 200. Will a golden cross occur? If so, the VIX will be on its way to 11 and the wealthy, that own large stock portfolios, will be dancing in the streets carrying Yellen around on their shoulders.

The red circles hint that different outcome is likely. Remember, when a golden cross occurs, or is about to occur, that takes weeks of time to develop, and in this case two months of stronger prices, so when the cross occurs, price is typically running out of gas and needs a rest. So price typically drops when a golden cross occurs; this is why the indicator is the butt of jokes. However, it is a good indicator. You simply have to be aware that a pull back is likely when the golden cross is about to occur and occurs, but if the golden cross remains (50 above the 200), stocks will recover and print higher in the weeks and months ahead. If the golden cross does not occur and the death cross remains, stocks will fall down the rabbit hole again. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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