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SP500 Financials HVol: Unusual Behavior ?
January 21 ( From Tradingview)
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Rising Historical Volatility ( HVol ) on SP500 Financial Sector ( SRFI ) is most of
the time indicative of a market trend change or acceleration of previous trend.
And falling HVol is usually associated in a bull trend or trendless market.
And rising HVol is usually associated in a bear trend or trendless market.
HVOL did reached on December 1 2015 a low level last seen back in mid-August 2015 when we had a correction trade pattern in SRFI. But what is interesting, it is that HVol was getting higher after a test of the resistance from a downtrend channel with Financials.
( See 1st chart below - Red Trendlines - Ellipses) SP500 Financial Sector ( SRFI ) Peaked at 344.90 on July 23rd.
In fact, when we broke a Rising Wedge Pattern on August 20 2015 at 329.80 and also the 200 DMA ( Day Moving Average - Green Line on the chart below ) then at 329.73 on SRFI , game was over on a short term basis and then reached then the panic selling level on August 24 at 299.11.
Since December 1 til now, we had an increase in the Historical Volatility on SP500 Financial Sector ( SRFI ) with a bearish trend in Financials since... Closing price on SRFI on January 20 was at 282.51.
SP500 Financial Sector ( SRFI ) also broke on January 15 a major support trendline that started since February 2 2015 then at 292.22. On the strong correction of January 20, it did kissed and rebound from the bottom previously reached on February 3 2014. ( See Chart below, Top Panel Orange Trendline )
But the most interesting technical factor is that the Historical Volatility ( HVol ) on SP500 Financial Sector
( SRFI ) is not spiking as we did see in the previous correction in August 2015 but staying at level seen in previous bottoms. That major correction since December 2015 have been quite orderly, a very unusual behavior if we take into account the Volatility reached in the Emerging Markets since.
That bad volatility is in fact showing that we are shifting into a more uncertain market behavior on SP500 Financial Sector ( SRFI ) as The Fed made in December its first rate increase and bringing a total monetary policy divergence against the other Central Banks...
SP500 Financials HVol: Unusual Behavior ? $SPY, $XLF
#Trading #volatility #SP500 #xlf
Top Panel : SP500 Financials ( SRFI - Candles )
SRFI 50 DMA ( Red Line )
SRFI 200 DMA ( Green Line )
Bottom Panel : Historical Volatility ( MA10 - Blue Line )