Always consider hidden risks
The VIX/Gold Correlation US Dollar and SP500: Higher Volatility Ahead?
May 18 2016 ( From TradingView , CNN)
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In these neutral times (good to know that the Fear and Greed Index
from CNN Money is coming from Greed Zone a month ago
to the Neutral Level now at 53). 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 near the 0.70 zone on April 8 2016 and VIX at 15.36, below its 200 DMA (Day Moving Average), indicating higher volatility ahead as history suggest... (See first chart below - Top Panel - Amber Line)The US Dollar Index is within a Downtrend Channel (See first chart below - Bottom Panel - Thick Blue Trendlines) but most importantly at the previous Breakout Trendline that started back since March 13 2015 (See first chart below - Bottom Panel - Thin Red Trendline): Breaking that Channel Trendlines will increase tremendously the Volatility of all US Financials Assets.
For the SP500 index, it started a Bullish Trend from an almost perfect double bottom (January 20 and February 11 2016) and failed to break the Major Resistance Trendline that started back on May 20 2015 (See 2nd chart below - Bottom Panel - Top Grey Trendline) and now near the Support Line of a Falling Wedge Technical Pattern.(See 2nd chart below - Bottom Panel - Bottom Blue Trendline)So both the US Dollar Index (DXY) ans 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 )