My last post on the SPX:VIX ratio refers. I mentioned that price on the Weekly ratio chart below may retest the 130.00 level and then rally. On Thursday of this week, price not only retested 130.00, but it blew right below to close around the 110.00 major support level.
Momentum has dropped below the zero level, indicating further weakness may be ahead.
The Monthly chart below of the SPX:VIX ratio shows that a massive outside bearish engulfing candle has now formed on the July candle (to close out this month) and that Momentum has also dropped below zero on this timeframe…also signalling we may see further weakness ahead.
The question is whether we see weakness continue and accelerate on Friday and next week, or whether we see price fluctuate wildly to consolidate or bounce and resume its upward trek for awhile before a potential next leg down.
The following Daily chart of the SPX:VIX ratio shows that Momentum has dropped to a very low level on this timeframe, which has typically been followed by some kind of consolidation or bounce…one to watch in the days ahead for possible clues on market direction and conviction.
Price action on the Dow 30 has seen a break below both a 60% Fibonacci fanline and rising channel from the 2013 breakout, as shown on the Daily chart below.
Price on the SPX has dropped to the 50% Fibonacci fanline and bottom of the rising channel from the 2013 breakout, as shown on the following Daily chart.
Price on the RUT has dropped below the 60% Fibonacci fanline and and well below the bottom of the rising channel from the 2013 breakout, as shown on the following Daily Chart.
Failure of the Dow and RUT to reclaim their respective channels, and failure of the SPX to remain within its channel will likely see further weakness develop in these three Major Indices…stay tuned for further intraday volatile price swings either way!