Tag: $VIX

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S&P up-trend still healthy

The S&P 500 retreated below support at 1850, warning of a correction, but the primary up-trend remains strong. Trend strength is depicted by this weekly chart of Ichimoku Cloud, with a buy signal at the start of 2013 and price holding high above a green cloud indicating trend strength.

S&P 500

Bearish divergence on 13-week Twiggs Money Flow indicates medium-term selling pressure, consistent with a secondary correction, but respect of the rising trendline would signal a healthy up-trend. And recovery above 1850 would offer a target of 1950*.

S&P 500

* Target calculation: 1850 + ( 1850 – 1750 ) = 1950

CBOE Volatility Index (VIX) is rising and a sustained shift above 20 would signal an increase from low to moderate risk.

VIX Index

The Nasdaq 100 also shows bearish divergence on 13-week Twiggs Money Flow, warning of medium-term selling pressure. Breach of the rising trendline would test primary support at 3400, while respect would confirm a healthy up-trend. Recovery above 3650 would offer a target of 3800*.

Nasdaq 100

* Target calculation: 3600 + ( 3600 – 3400 ) = 3800

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S&P 500 advance

The S&P 500 found support at 1850, signaling an advance to 1950*. Repeated troughs high above zero on 13-week Twiggs Money Flow indicate strong long-term buying pressure

S&P 500

CBOE Volatility Index (VIX) below 15 continues to reflect low market risk typical of a bull market.

VIX Index

The Nasdaq 100 respected support at 3600, but bearish divergence on 13-week Twiggs Money Flow warns of medium-term selling pressure. Failure of support would warn of another correction. Follow-through above 3700, however, would offer a target of 3800*.

Nasdaq 100

* Target calculation: 3600 + ( 3600 – 3400 ) = 3800

Bellwether Transport stock Fedex found support at $130 on the monthly chart. Breakout above $145 would offer a target of $170*. Rising 13-week Twiggs Money Flow indicates buying pressure. A bullish sign for the broader economy. Reversal below $130 is unlikely, but would warn of a decline to $120.

Dow Jones Industrial Average

* Target calculation: 145 + ( 145 – 120 ) = 170

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Never argue with the tape

I daily read predictions of the imminent collapse of stock prices. But ask yourself one question: Is this a bull market or a bear market?

S&P 500

CBOE Volatility Index (VIX) is below 15.

VIX Index

A prudent speculator never argues with the tape. Markets are never wrong, opinions often are.

~ Jesse Livermore

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S&P 500: Great follow-through

Sellers evaporated as the S&P 500 followed-through above 1860, closing at 1875 on normal volume. Expect an advance to 1950*. The long-term trend is bullish, with repeated 21-day Twiggs Money Flow troughs above the zero line.

S&P 500

* Target calculation: 1850 + ( 1850 – 1750 ) = 1950

CBOE Volatility Index (VIX) retreated below 15, typical of a bull market.

VIX Index

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S&P 500 persistent selling

The S&P 500 broke out above 1850, but the tall shadow/wick reflects persistent selling. The E-mini (Mar 2014) is currently sitting just above 1840. Index breakout below this level would warn of another correction. Follow-through above 1860 is now unlikely, but would signal an advance to 1950*. The long-term trend remains bullish, with repeated 21-day Twiggs Money Flow troughs above the zero line.

S&P 500

* Target calculation: 1850 + ( 1850 – 1750 ) = 1950

CBOE Volatility Index (VIX) is likely to rise because of developments in the Ukraine, but below 20 reflects a bull market.

VIX Index

Nasdaq 100 reversal below 3600 would warn of a test of primary support at 3400. Decline of 13-week Twiggs Money Flow below its recent low would strengthen the signal. Breakout above 3700 seems less likely, but would offer a target of 3800*.

Nasdaq 100

* Target calculation: 3600 + ( 3600 – 3400 ) = 3800

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S&P 500 at 1850

The S&P 500 continues to encounter stout resistance at 1850. The narrow range, however, reflects buyers commitment. Follow-through above 1860 would signal an advance to 1950*. Reversal below 1825 is less likely, but would warn of another correction. The long-term trend remains bullish, with repeated 21-day Twiggs Money Flow troughs above the zero line.

S&P 500

* Target calculation: 1850 + ( 1850 – 1750 ) = 1950

CBOE Volatility Index (VIX) below 20 continues to indicate low risk typical of a bull market.

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Nasdaq leads market higher

The Nasdaq 100 broke through its January high, signaling an advance to 3800*. Retreat below the (secondary) rising trendline is unlikely, but would test primary support at 3400. Another 13-week Twiggs Money Flow trough high above zero indicates strong buying pressure.

Nasdaq 100

* Target calculation: 3600 + ( 3600 – 3400 ) = 3800

The S&P 500 is testing similar resistance at 1850. Breakout would signal an advance to 1950*. Respect is unlikely, given the Nasdaq breakout, but would warn of another correction. Completion of a 13-week Twiggs Money Flow trough above zero would be a bullish sign.

S&P 500

* Target calculation: 1850 + ( 1850 – 1750 ) = 1950

CBOE Volatility Index (VIX) below 20 suggests low risk typical of a bull market.

VIX Index

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S&P 500 finds support

The S&P 500 hammer candlestick on the weekly chart indicates support at 1750 and the secondary trendline. Follow-through above 1800 would strengthen the signal, suggesting an advance to 2000*. Breakout above 1850 would confirm. Recovery of 13-week Twiggs Money Flow above 40% (the most recent high) would indicate that the correction is over. Breach of 1750 seems unlikely, but would warn of a test of the primary trendline, around 1700.

S&P 500

* Target calculation: 1850 + ( 1850 – 1700 ) = 2000

CBOE Volatility Index (VIX) retreated below 20, suggesting low risk typical of a bull market.

VIX Index

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US correction confirmed

The S&P 500 broke support at 1770, confirming a secondary correction. At times like this it pays to look at monthly charts to gain a long-term perspective. The first line of support is at 1700. Respect of the secondary trendline would flag a weak correction indicative of a strong up-trend. Breach of that level, however, would suggest a strong correction to 1550 and the primary trendline. The scale of the bearish divergence on 13-week Twiggs Money Flow, when compared to the divergence in 2007, suggests medium-term selling pressure — typical of a secondary correction rather than a (primary) reversal.

S&P 500

CBOE Volatility Index (VIX) crossed to above 20, suggesting moderate risk, but not yet cause for concern.

VIX Index

The Nasdaq 100 retreated below 3500, warning of a correction. Again, the bearish divergence on 13-week Twiggs Money Flow appears secondary and no threat to the primary up-trend.

Nasdaq 100

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The correction we had to have

US markets were overdue for a correction and continuation of the advance for much longer would have resulted in instability, from an imbalance between buyers and sellers.

At Research & Investment we do not attempt to time entries and exits on secondary corrections. Our research shows that this is expensive and erodes performance. What we do pay a lot of attention to, on the other hand, are macro-economic and volatility indicators of market risk, exiting to cash when risks become elevated.

With a long-term view of the market, secondary fluctuations are relatively insignificant, but they do present opportunities to increase investment in the market.

The S&P 500 broke support at 1810, signaling a correction. Bearish divergence on 21-day Twiggs Money Flow strengthens the signal. Expect support at the Setember 2013 high of 1730.

S&P 500

A monthly chart places the latest breakdown in perspective. Respect of support at 1700 — and the secondary trendline — would confirm a healthy primary up-trend. A 13-week Twiggs Money Flow trough above zero would again strengthen the signal.

S&P 500

* Target calculation: 1800 + ( 1800 – 1700 ) = 1900

The VIX is rising steeply, but continues to indicate low risk and a bull market.

S&P 500 VIX

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