Keystone's SPX:VIX Ratio Indicator Turns Bullish

A big development occurred yesterday, Keystone must have been snoozing in the hammock out back. About one hour after yesterday's open, the SPX:VIX ratio popped above Keystone's critical 68 level (reference the Turn Signal page on this site for more information) signaling that the market bulls are back in firm control of the markets.  The red circle a month ago ushered in the bear fun but that ended yesterday.  The bottom for the ratio is easily identified by the falling green wedge, oversold conditions and all the indicators positively diverged (green lines). This results in the launch off the bottom. Note that a bull flag pattern quickly played out; first leg from 48 to 62, a distance of 14. Then consolidation with a drift lower, then the second leg starts from 55, thus, 55+14 = 69 target. Price blew threw that honoring the bull flag pattern.  The indicators are all long and strong, higher highs as price makes higher highs, therefore, a matching or higher high can be anticipated ahead, after a pull back.

The 68 is critical so it would not be surprising to see the ratio drop back down for a back kiss of the 68 level, which would correspond to market selling.  But the long and strong profile will bring the ratio back up again, and the markets up along with it. At that time, negative divergence will probably be in place to roll the ratio over. The black line in the right margin is a projected path ahead. The surprise yesterday is that markets finished flat. Keystone cannot remember the last time that happened since once price punches up thru the 68 a large market up day would have been expected. This places big pressure on today. If the ratio stays above 68 today, then a large up day would be expected for markets with a Dow Industrials triple digit up day. If the market bears want to stop this ever-increasing bullish picture developing, they need to move this ratio under 68 immediately.  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.