Always consider hidden risks
The VIX/Gold Correlation US Dollar and SP500: Higher Volatility Ahead?
November 23 2016 ( From TradingView , CNN)
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In these greedy times (good to know that the Fear and Greed Index
from CNN Money is coming from the Fear Zone (US Election-November 8)
to the Greed Level now at 67 (highest reading post election).
It is interesting to look the behavior (correlation) of the VIX and the
Gold in relation to the US Dollar (USD-DXY) and the Mighty SP500 Index.As shown by the charts below, this correlation tells that the risks have
not started to be fully priced into the foreign exchange market yet in terms
of volatility: expect more volatility in the US Dollar and SP500 in the next few sessions...VIX/GOLD correlation getting over the 0.70 zone on November 22 2016 (See first chart below - Middle Panel - Blue area) and VIX at 12.41, well below its 200 DMA (Day Moving Average) at 15.25 and near testing the Major Support Trendline, indicating higher volatility ahead as history suggest... (See first chart below - Top Panel - Yellow Trendine)The US Dollar Index is within a Huge Daily Uptrend Channel (See first chart below - Bottom Panel - Uptrend Channel) but most importantly broke a Major Resistance Trendline that started on March 13 2015 (See first chart below - Bottom Panel - Thick Yellow Trendline - Ellipse): Breaking back that level (now becomes Support) will increase tremendously the Volatility of all US Financials Assets.
For the SP500 index, it started a Bullish Trend from the post-US Election panic on November 8 2016 to make a new high ever this week (See 2nd chart below - Bottom Panel - Ellipse) on Trumpification of Financial Markets. It is still within a Daily Major Rising Wedge Technical Pattern that started back since May 20 2015 ( previous major top for the SP500 Index) and now testing the Resistance side of it (See 2nd chart below - Bottom Panel - Yellow Trendlines) Seasonality is toward a bullish mode til the beginning of December.Making the US Dollar Index (DXY) Great Again seems a good thing; but adding some US Dollar shortage worldwide could become my Canary in the Coal Mine: Haven’t We Done This Before?
So both the US Dollar Index (DXY) and the SP500 are within a technical set up that call for a higher Volatility environment as history suggest according to the VIX/GOLD correlation.
The VIX/Gold Correlation US Dollar and SP500: Higher Volatility Ahead? $SPY, $SPX, $VIX, ,
$GLD, USDX #Trading #vix #gold #SP500
VIX ( Top Panel )
VIX over Gold Correlation ( Middle Panel )
SP500 Index ( Bottom Panel )
VIX ( Top Panel )
VIX over Gold Correlation
( Middle Panel )
US Dollar Index ( DXY - Bottom Panel )