Category Archives: Sentiment

Volatility Crash

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Everywhere you look – – green, green, green, lifetime highs, soaring charts, with one notable exception. Volatility, of course! The fear index $VIX has, in just 1.5 years, collapsed from 53.29 to almost the single digits. Indeed, there is only ONE time in the past decade it’s been even a little bit lower, and that was back on January 27th. This is about as low as it goes, folks.

0425-vix

Low Volatility is Crucial for SPX Breakout

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Even though the S&P 500 Index (SPX) did not reach a new all-time high today (Monday), the SPX:VIX ratio did, as shown on the following two Daily charts.

Keep an eye on the ratio, since an RSI above 50 and upside crossovers on the MACD and PMO indicators are signalling that a new bull market is shaping up for the SPX. Such a breakout would need to be confirmed by a bullish crossover on the PMO, with the crossover maintained on the MACD and the 50 level held on the RSI on the SPX.

Jeez Louise, Bonds Breaking Out?

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Look, we are all wrong sometimes.  That is because the markets are this way one day, that way the next and then something else the day after that.  That is why we need bigger picture plans.

I for instance, have been guarded on the gold sector and technically at least, still need to see some upside parameters taken out.  But today’s market information brings a potential fundamental underpinning as the stock market flirts with some important parameters of its own.

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All Bid Up and Nowhere to Go (almost)

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Before I get into the Trade Idea, I’m going to review the context of the S&P500 from a structural standpoint and a typical deviation standpoint. First of all, structurally, the Weekly and Daily charts show higher highs and higher lows, the very definition of an uptrend. In November of 2016, the SPY completed a $20 wide trading channel of which currently price is a stone’s throw from its high resistance. The channel would suggest that buying potential is limited.

Now, anyone who hangs around the comments has seen that I use 5% simple moving average envelopes around a 100MA as a measure of movement potential (oversold, neutral, overbought). Where are we now? Yep, hit it on Friday. Again.  (Click on any chart to see a larger version).

170211 - 2year 100MA Deviation

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