The VIX blasted from about 14 to 24 in recent days, which typically has meant the termination of fun for the bears, forcing them to wait, yet again, for weeks or even months for another chance to make money. I’m not so sure it’s going to roll that way this time, but let’s take a look at some action in a few major cash markets, accompanied by a trio of exponential moving averages (50/100/200).
The NASDAQ Composite tagged the 200-day EMA, which normally marks the end of a sell-off. It goes without saying that the resumption of the bull market following such a sell-off is not perpetual. All trends end. My spidey sense is that this one has, too.
The Dow 30 Industrial Average has, notably, broken its medium-term trendline. We have also double-topped, and if global relations continue to disintegrate as rapidly as they have recently, we’re finally going to get the monster bear market we’ve been eagerly anticipating.
The small caps have been especially week, as shown via the Russell 2000 index. We have broken into a new, lower Fibonacci range, and the 50-day EMA has already crossed under the 100-day. It hasn’t done that since 2023.
As for the semiconductors, their own moving average breakdown is far farther along. Indeed, the three EMAs have already inverted, illustrating what used to be far and away the market leader has instead become a millstone around the neck of all equities.
I am especially excited about the monster top in the oil/gas sector. Trump is pledging $50 oil to beat inflation. Cool. Just watch as the energy companies get utterly destroyed with that kind of price target.
Lastly, the once high-flying NASDAQ 100 has been taken down a notch or two. We have tagged the 200-day EMA, illustrating how badly oversold the market become, but in this environment, I am not expecting countertrend rallies to last more than a few days.
BONUS PICTURE: here is me putting this post together at night with Duke helping out.
