Sunday, December 20, 2015

US Stock Market Is Poised To Go Down In The Short-Term

Last Friday S&P500 broke below its technical support. What is more - it made it on a very high volume. In most cases such an occurrence indicates that an important move is coming. Please, look at the chart below:

The question is whether this move will be up or down? To find some kind of an answer - look at another chart:

The chart shows net positions held by speculators in VIX. VIX measures the volatility of the stock market. Generally, VIX is adversely correlated with the index value - if index goes down, VIX goes up. And vice versa.
The chart shows that whenever speculators are net long-VIX, i.e. they bet on the index going down, a good buying opportunity is approaching. This was the case in October 2014, February 2015 and in September 2015. Currently speculators are still net short-VIX, which means that it is not time to buy stocks.

Summarizing - looking at those two charts, it seems that we will see the US stock market going down in the short-term.

No comments:

Post a Comment