Always consider hidden risks
SP500 Financials HVol: Complacent Markets?
March 29 2016 ( 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 February 16 2016 a high level last seen back in September
2015 after we had a strong correction trade pattern in SRFI. SP500 Financial Sector (SRFI) Peaked at 344.90 on July 23rd and is making a Lower High and Lower Low Technical Pattern since then.
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 February 16 2016 til now, we had a decrease in the Historical Volatility on SP500 Financial Sector (SRFI) with a strong bullish trend in Financials since... Closing price on SRFI on March 28 was at 302.06.
SP500 Financial Sector (SRFI) also broke on March 24 a steep rising wedge that started since February 11 2016 bottom at 262.78. (See Chart below, Top Panel - Grey Trendlines )
Historical Volatility (HVol) on SP500 Financial Sector (SRFI) is falling at a level that we did see in the previous peak in price like in August 2015 and Novemver 2015. (See Chart below, Bottom Panel - Red Trendline - Ellipse)
But the most interesting technical factor is that the Historical Volatility (HVol) on SP500 Financial Sector
(SRFI) is falling at previous market top at a time that we retested the previous peaks (August, September and October 2015) on SRFI. A tiny form of Complacency we have seen lately on Financials.
(See Chart below, Top Panel - Blue Trendline)
SP500 Financials HVol: Complacent Markets? $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 )