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SP500 Index: a Currency or Volatility Play ?
September 8 ​( From TradingView )

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Average of all 5 Volatility Index / 5 ( Candles )
​CBOE Interest Rates Volatility Index
​CBOE China Markets ETF Volatility Index
CBOE EuroCurrency ETF Volatility Index
​CBOE Gold ETF Volatility Index
CBOE Emerging Markets ETF Volatility Index

​SP500 Index Volatility ( VIX - Bar Chart at the Bottom )​​
One of my Premium Services Clients asked me about when to expect the
​Volatility in US stock to fade. I ll try to answer this question in that article.

​​​​​​So we will see below six different volatility index ( from stocks to currencies
​to ​emerging ​markets ) ​that will give us a broad view in term of risks...

The volatility of the US domestic market was at the low historical band since
​mid-August - ​a sign of complencency. Historical Seasonalities were already
in favor of more Volatility back then. ​But the Currency markets and China did
​bring a turnaround into the Volatility of US Stocks...

​Volatility of Different Asset Class


Already 3 Volatility Asset Class were rising fast at the end of July 2015: US Interest Rates Volatility Index, China Markets ETF Volatility Index and the  EuroCurrency ETF Volatility Index. One that did move the least is the SP500 Volatility Index know as the VIX as shown by the chart below.
CBOE Interest Rates Volatility Index ( White / Right scale )​
​CBOE China Markets ETF Volatility Index  ( Pink / Right scale )​
CBOE EuroCurrency ETF Volatility Index   ( Blue / Right scale )​
​CBOE Gold ETF Volatility Index  ( Green / Right scale )​
CBOE Emerging Markets ETF Volatility Index  ( Yellow / Right scale )​ ​
SP500 Volatility Index ( Thick Red / Left scale ) ​
Conclusion

May be volatility was giving us a pre-warning on the markets... We can t say that ​Mr Market didn t prevent us from being too complacent...​​​

​​Mr YEN gave the first shot across the bow, Emerging Currencies gave us the coup de jarnac by breaking that Major Support Trendline; that was the beginning of the correction into the Mighty SP500 Index.

As long as we will see pressure in Emerging Market Currencies, then risk is high Volatility in Financial Markets all around the world. Not close to the ​​Asian s crisis of 1997 (0ld article on that subject) , some imbablances need to be corrected soon to avoid a new one...

Is the ​​SP500 Index a Currency or Volatility Play ? Well both I d say... But as history suggest, it start often on Emerging Market Currencies price shifts and spill over ...

​​Follow the CBOE Emerging Markets ETF Volatility Index (VXEEM)  for more insights

YEN ( USDJPY - Candles  -  Chart at the Top )
​SP500 Index ( Bar Chart at the Bottom )



Average of all 5 Volatility Index / 5 ( Candles )
​CBOE Interest Rates Volatility Index
​CBOE China Markets ETF Volatility Index
CBOE EuroCurrency ETF Volatility Index
​CBOE Gold ETF Volatility Index
CBOE Emerging Markets ETF Volatility Index

SP500 Index​ ( Bar Chart at the Bottom )​​



​​But what the market participants are missing completely was that ( according to AllStarCharts ) the level of the Yen triggered that bid move on the SP500 Index  as shown by the chart below ( Ellipses )...
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SP500 Index: a Currency or Volatility Play ?      $SPY, $VIX #VIX #SP500

Financialiceberg.Com
Financialiceberg.Com
Financialiceberg.Com
In fact, to see it more clearly, I did an average of the 5 Volatility Index from different Asset Class ( Candles on the Chart Below ) to compare it to the VIX Index ( Bar Chart at the Bottom of the Chart Below ).
Rising Volatilites usually is bearish on Equities as shown by the Vertical Lines on the Chart Below.
Financialiceberg.Com
So we were already in a toppish phase for the SP500 Index because of that Major Double Top in the YEN ( 2007 and 2015  - as shown by the chart above ). So what bring that sudden decline? Most think it was the Chinese Yuan Devaluation on August 10...

But few realize that already the Emerging Market Currencies ( CEW ETF ) ​​broke a Support Trendline on the week of July 20 ( Grey Trendline - Chart Below ) and most importantly that on the August 17 week, EM Currencies were near a Total Breakdown on a Major Falling Wedge that started back in May 2010 ( Bottom Red Trendline - Ellipse - Chart Below ).
CEW ETF ( Wisdomtree Emerging Market Currency - Candles Daily )
​EEM ETF ( iShares MSCI Emerging Market  - Blue Line Daily )
Financialiceberg.Com