Connect with us

Hi, what are you looking for?

Stocks

Not Much Good Takes Place When This Happens

As a long-term stock trader, there’s one development in the stock market that takes me, and many others, to our collective knees. It’s a Volatility Index ($VIX) that rises past 20. There’s never been a bear market that’s unfolded with a VIX that remains below 20. FEAR is the common denominator in every bear market decline, besides the obvious price decline itself.

I’ve shown this VIX chart on many occasions, but now that we’ve seen the VIX soar since the Fed meeting, it’s certainly an appropriate time to remind ourselves of one simple market fact.

Stock market performance is at its absolute worst with a VIX above 20. Check out this chart:

This should at least open your eyes to the possibility of lower prices. These calculations date back to S&P 500 performance after April 10, 2013, the day that the S&P 500 cleared the double top from 2000 and 2007, confirming a new secular bull market was in place.

The rally since Monday’s opening bell has been nice, but there’ve been very few key resistance levels cleared. Early tests are here, or rapidly approaching, right now. Let’s look at a few key indices on an hourly chart. Many times, the declining 20-hour EMA provides solid near-term resistance, stopping the initial bullish wave in its tracks. Take a look:

S&P 500 ($SPX):

NASDAQ 100 ($NDX):

Semiconductors ($DJUSSC):

Failing at these key resistance levels doesn’t mean a bear market is underway. It simply increases the odds that the resistance levels provided will be difficult resistance to initially overcome. Likewise, a break through above key short-term resistance isn’t a precursor to new all-time highs around the corner. I’m simply watching these levels as a “piece” of the Q3 puzzle, trying to determine whether the odds of a further decline are increasing or decreasing.

9 days ago, I held a “Why the S&P 500 May Tumble” webinar, providing members with a ChartList of various price and economic charts they should watch in determining the likelihood of a big decline. That webinar paid off handsomely as our EB members were able to plan ahead for the increasing odds of a significant market decline. Now members, not too surprising, are asking in droves whether this is a pullback to buy back stocks cheaper, or if this is more likely to be a much deeper correction or even bear market that’s developing.

Clearly, these two choices are miles apart and getting this next step right will be the difference between a very painful Q3, one in which a lot of money might be lost, or setting up one of those “buying opportunities of a lifetime.”

I can’t answer all of our members’ questions one at a time, so late yesterday afternoon, I decided to host the obvious next step webinar, “HUGE Selling and Rising Fear: Pullback or CRASH??” This is a members-only event and it will begin at 4:30pm ET, just after today’s close. If you’re not a member, but would like to attend, we’ve got you covered. Simply CLICK HERE for more information and to register as a FREE 30-day trial member.

This is another HUGE event and I’d love to see you there!

Happy trading!

Tom

Advertisement

    You May Also Like

    Investing

    RevisingTheBankSecrecyAct_NorbertMichelAndJenniferSchulp_CMFAWP007   The post Revising the Bank Secrecy Act to Protect Privacy and Deter Criminals (CMFA Working Paper No.007) appeared first on Alt-M.

    Investing

    Recently, an investment advisor and Bitcoin proponent tweeted the claim that “[f]or most of human history” the “[s]eparation of money and state was the...

    Business

    Rollee enables worker’s to share their professional data, spread over one or more financial platforms. Ali Hamriti, CEO and Co-Founder of Rollee, is on...

    Business

    The energy crisis means that as the price of wholesale commercial energy hits an unprecedented high, businesses must pay notably more for their energy...

    Disclaimer: successfuldealnow.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 successfuldealnow.com | All Rights Reserved