Tag: CBOE VIX Volatility Index

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Strong recovery in 2014

The S&P 500 followed through above 1810, signaling another primary advance. Troughs high above zero on 13-week Twiggs Money Flow indicate strong long-term buying pressure. Short corrections such as the recent retracement are normally followed by strong gains, but there is no reliable method calculating targets in an accelerating up-trend. The target of 1910* calculated by the conventional method may well underestimate the advance.

S&P 500

* Target calculation: 1810 + ( 1810 – 1710 ) = 1910

My favorite bellwether, transport stock Fedex, is surging ahead on the monthly chart, suggesting a strong recovery for the US economy in the year ahead.

Fedex

CBOE Volatility Index (VIX) readings below 20 also suggest a bull market.

VIX Index

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S&P 500: No sign of a correction

The S&P 500 has reached its target of 1800 for the current advance, suggesting the market is due for a correction. But there is no sign of selling pressure on 13-week Twiggs Money Flow. Follow-through above 1820 would suggest an accelerating up-trend — with sharper gains and shorter retracements. Reversal below short-term support at 1780 is less likely, but would warn of a correction.

S&P 500

* Target calculation: 1725 + ( 1725 – 1650 ) = 1800

CBOE Volatility Index (VIX) continues to indicate a bull market, with readings below 15.

VIX Index

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S&P 500 reflects bullish LT sentiment

The September quarter-end often heralds a correction as fund managers re-balance their portfolios and shed under-performing stocks. Congressional gridlock raised the probability even higher, but the market has brushed this aside, reflecting bullish long-term sentiment.

The S&P 500 rallied sharply off support at 1650. Follow-through above 1710 would indicate an advance to 1790/1800*. A 21-day Twiggs Money Flow trough close to zero indicates buying pressure. Reversal below 1675 is unlikely at present, but would warn of a test of primary support at 1630.

S&P 500

* Target calculation: 1710 + ( 1710 – 1630 ) = 1790

VIX retreated below 20, signaling low/moderate market risk.

VIX Index

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S&P 500 threatens correction but Nasdaq holds firm

The September quarter-end often heralds a correction as fund managers re-balance their portfolios and shed under-performing stocks. Congressional gridlock raises the probability of a correction even higher.

The S&P 500 continues to test support at the May high of 1675 on the daily chart. Declining 21-day Twiggs Money Flow warns of medium-term selling pressure; reversal below its recent lows would further strengthen the signal. Breach of support and the (secondary) rising trendline would signal a correction to primary support at 1625/1630. Respect of the (secondary) trendline and recovery above 1700 is unlikely, but would indicate another advance.

S&P 500

VIX threatens to cross above 20, into no-man’s-land between low and high. Follow-through above 25 would warn of elevated market risk.

VIX Index

Dow Jones Industrial Average is heading for a test of primary support at 14800. Bearish divergence on 13-week Twiggs Money Flow warns of a reversal and breach of 14800 would strengthen the signal. Follow-through below 14500 would confirm. Recovery above 15660 is unlikely, but would indicate a fresh advance.

Dow Jones Industrial Average

The Nasdaq 100, however, is surprisingly bullish. 13-Week Twiggs Money Flow troughs well above zero signal buying pressure, while the index advances toward its current target of 3300*. Breach of the rising trendline would warn of a correction to 3050.

Nasdaq 100

* Target calculation: 3050 + ( 3050 – 2800 ) = 3300

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Dow warns of reversal but VIX refutes

Dow Jones Industrial Average tall shadow (or wick) on last week’s candle warns of short-term selling pressure — echoing the long-term bearish divergence on 13-week Twiggs Money Flow. Reversal below 14800 would confirm a primary down-trend. Breakout above 15660 is unlikely, but would signal a fresh advance.

Dow Jones Industrial Average

However, VIX below 15 continues to suggest a bull market.

VIX Index

I have more faith in the calculation of the S&P 500 index — which displays a milder bearish divergence. While reversal below 1630 would signal a reversal, it would not penetrate the long-term rising trendline; only breach of 1530 would be cause for serious alarm. Respect of support at 1630, on the other hand, would be bullish, suggesting an advance to 1850.

S&P 500

* Target calculation: 1700 + ( 1700 – 1550 ) = 1850

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Dow, S&P 500 selling pressure but VIX bullish

Dow Jones Industrial Average put in a strong blue candle last week, but 13-week Twiggs Money Flow bearish divergence  continues to warn of a reversal. Exercise caution until there is a breakout above the August high of 37% on TMF following an index breakout above 15660. Failure of primary support at 14500 would confirm a reversal, but continuation of the up-trend now seems as likely.

Dow Jones Industrial Average

The S&P 500 displays a similar bearish divergence on the daily chart, indicating selling pressure. 21-Day Twiggs Money Flow is now rising and follow-through above the July high at 23% would negate the warning. As would breakout above 1710 on the index chart, signaling a long-term advance to 1900*. Respect of resistance remains as likely, however, and reversal below 1670 would test the then primary support level at 1630.

S&P 500 Index

* Target calculation: 1710 + ( 1710 – 1630 ) = 1890

Despite the bearish divergences, VIX below 20 continues to suggest a bull market.
VIX Index

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Dow warns of reversal but S&P 500 hesitates

Dow Jones Industrial Average bearish divergence on 13-week Twiggs Money Flow warns of a reversal. Failure of primary support at 14500/14600 would confirm. Recovery above 15000 would defer the test of primary support, but strong selling pressure should not be ignored.

Dow Jones Industrial Average

Friday’s long-legged doji candle on the S&P 500 (daily chart) indicates hesitancy. Follow-through above the descending trendline would suggest that the correction is over, while a fall below the longer-term rising trendline would warn that momentum is slowing and another test of primary support at 1560 is likely.  Bearish divergence on 21-day Twiggs Money Flow indicates selling pressure. In the long-term, failure of primary support would offer a target of 1400*.

S&P 500 Index

* Target calculation: 1550 – ( 1700 – 1550 ) = 1400

VIX below 20, however, continues to suggest a bull market.
VIX Index

Rising 13-week Twiggs Money Flow and consolidation above the preceding peak at 3040/3050 on the Nasdaq 100 also favors continuation of the primary up-trend.

Nasdaq 100 Index

Signals are mixed at present, but a stronger bear signal on the Dow, or an upward spike on the VIX, would tilt probabilities towards a reversal.

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