Yesterday to initiate the broad market selling, the SPX:VIX ratio dropped under the 68 level. The ratio stayed that way all day despite the recovery in equity prices and closed the session sub 68.
So with the ratio sub 68, the ball was in the bears court to start todays session. A weak beginning had the bears looking good, until, the ratio moved above 68 at 11:30 AM EST. That means the expected broad maket selling will not occur, the ratio must drop under 68 and stay there for the broad markets to sell off.
Four minutes later at 11:34 AM EST, the bears took the ratio below 68 again so they wrestled back control. At 11:46 AM, bulls got the ratio back above 68, 12:47 PM the bears take over again, 12:51 PM the bulls take the ratio above 68 again, and then at 1:17 PM the bears took the ratio under 68 again.
As this is written, the ratio now jumps back above 68 and sits at 68.28 at 1:37 PM EST. This favors the market bulls again.
So the Kabuki Dance continues, watch this 68 level to see who wins. This exercise obviously highlights how the markets are in a tug of war today, bull vs. bear, one side is going to win and pull the market hard in that direction.
The bears may have a slight edge since weak retail and copper, as well as high volatility, is in the bear camp, but, the bulls are still running with their two stars, semi's and financials. These five areas will forecast the broad market direction as one or more of these sectors will decide to join the other camp and show the way the broad market will go. SPX:VIX ratio 68 level is key, now 68.20, the bulls are trying to hang on and maintain control. Broad markets will sell off when the ratio goes under 68 again. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.
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