Always consider hidden risks
SP500 Financials and VIX: No Fear into that Market ?
August 17 ( From Stockcharts )
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The main technical indicators like the Ratio of the SP500 Financials (SPF) and
the VIX compare to the Mighty SP500 are showing a confirmation of Risk On
since August 12 when the 7 day moving average turned upward as shown
by the chart below ...
And each time we had the 7 day moving average going up or down ( red line ),
market followed as you may see in the chart below ( ellipse )...
But look at the divergence; each time the ratio was having a
higher high, the market made a lower short term high (May 21, June23, July 20). ( See Ellipses on the chart below ).
On July 22, the 7 DMA on that ratio reached level last seen since the previous turnaround ( previous max risk on like in February, August 2014 - see chart below - ellipses ) and indicating lower risk for the market.
Huge pullback in that ratio have been in the past a warning sign of a market correction in the past like in January 2014, July 2014 and August 2014 as shown by the chart below.
But Since August 12 with the 7 DMA ( Day Moving Average - Red Line in the chart below ) on that ratio turned upward at level which usually we see a turnaround, ( like May 14 and June 10, July 9 - See Ellipses and Red Trendline on the Chart Below ) the market is telling us to expect a risk on wave ( Volatility Premium Rising Into the Market ) and a tiny upmove as shown by the chart below.
The market continue to price less and less risks on each correction as the level of the ratio continue to make higher lows... The Fear Gauge is definitively falling as the ratio reached previous levels of 0.72 and associated with a market near total complacency as of Friday last week.
But the most interesting technical factor is that SP500 Index (SPX) tested a rising wedge support trendline on August 12. As long as we stay within that wedge, trend is that we will still have a Macro lower risk behavior.
See chart below - Blue Trendlines - Ellipses.
But take note that VIX usally rise starting mid-August as seasonalities kicks in as history suggest.
SP500 Financials and VIX: No Fear into that Market ? $SPY, $XLF #Trading #vix #xlf #SP500
SP500 Financials (SPF) over Volatility Index (VIX) ( Blue Line ) MA 7 ( Red Line )
SP500 Index ( Candles )