Always consider hidden risks
SP500 Financials HVol: Unusual Behavior ?
October 12 ( 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 August 7 a low level last seen back in mid-April 2015 when
we had a range trade pattern in SRFI. But what is interesting, it is that HVol is getting lower after a false break out on July 22 with Financials, that was the very first unusual trading behavior.
( 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 September 2 til now, we had a decrease in the Historical Volatility on SP500 Financial Sector ( SRFI ) with a bullish trend in Financials since... Closing price on SRFI on October 9 was at 313.03.
The SP500 Financial Sector ( SRFI ) is now trading within a Downtrend Channel that started since August 25 as shown by the chart below.
But the most interesting technical factor is that the Historical Volatility ( HVol ) on SP500 Financial Sector ( SRFI ) is not falling as we did see in previous top but staying at level seen in previous bottoms.
A very unusual behavior if we look back at history. (See Ellipses - Chart Below ).
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 continue to delay its first rate increase and Asian Markets are still quite volatile indeed. Read Also: Market volatility reflects uncertainty about low-growth economy
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 )