Always consider hidden risks
SP100 Index ETF OEF: Generals too Confident?
August 17 2016 ( From TradingView )
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The SituationWe just start to realize how deep the correction near the end of the month of June was on the US Equity Market and all that a courtesy of Brexit Fears. From the pre-Brexit close made on June 23 2016 at 93.30 on the SP100 Index ETF OEF (iShares S&P 100 ETF), to post-Brexit close 2 trading sessions after on June 27 at 88.79, a drop of 4.8%, a level reached in mid-March 2016. Rebounding from those technical levels was quite a statement from Mr Market but few of us realize that the the post-Brexit panic was in fact an opportunityfor portfolio managers to rebalance at the end of month/quarter from cash and bonds to stocks. Also,the relative flight to quality and liquidity was in strong favor of US Equities. Since then, an atypical rally occured as the Breakout on OEF ETF on July 8 2016 failed to bring much interest as trading Volume continue to shrink.We broke on August 10 2016 a Steep Rising Wedge (See First Chart Below - Blue Trendlines) and are now within an Uptrend Channel.In fact, the top 100 stocks of the SP Index is under performing the Mighty SP500 Index since February 8 2016 til the beginnig of June and since then into a consolidation pattern. Looking at the ratio of the SP100 Index ETF OEF over the SP500 Index (Second Chart Below - Blue Line). Quite surprising that the top 100 stocks (know as the Generals) did not perform better than that into the breakout phase since July 8 2016.
At a time were the market is complacent for some, overvalued for others, for me the missing link is a complete lack of Volatility. Few of us realize that we are at the turning point in terms of seasonality on SP500 Index Volatility know as VIX. Read also: VIX near seasonal low ahead of most volatile time of the yearWhat strikes me the most is that as the Generals (SP100 Index ETF OEF) are not outperforming the Mighty SP500 Index ETF SPY since the breakout, the Volatility of the SP100 Index (CBOE VXO) is falling faster than the Volatility of the Mighty SP500 Index (CBOE VIX) on daily relative basis since February 2016 as shown by the third chart below. We are noe on the Support Trendline that started back since June 2014!
In Summary, we have now Generals not outperforming as most of the soldiers did better performance wise lately, all that within an ultra low Volatility set up..... Are the Generals too Confident?
US Stock Indices Technicals: Generals in Full Retreat? $SPY #investing #spy #SP500
SP100 Index ETF OEF
SP100 Index ETF OEF
SP500 Index ETF SPY ( Blue Line )
SP100 Index Volatility VXO
SP500 Index Volatility VIX ( Blue Line )