The VIX, Banks, and the Shanghai Index in Trouble ...

By: Marty Chenard | Thu, Jun 5, 2008
Print Email

This morning, we will look at the VIX (Volatility Index), the Banking Index, and the Shanghai index which is in peril of having a very sharp drop.

First ... let's look at the VIX vs. the S&P 500. This is its 60 minute chart going back to last September.

From March to May, the S&P went up in a slight wedge and failed to the downside on May 21st. During the current down movement, the S&P made a lower bottom and then a lower top. If it now makes another lower bottom, that would confirm a continuing, short term downside move.

At the same time, the VIX broke above its April/June resistance this week which says that fear levels are increasing. This represents a negative, divergence condition relative to the S&P and subjects the S&P to more downside. Unlike the NASDAQ 100 and the Russell 2000 (which have been holding up), the S&P 500 has been influenced by the weakness in financials. (This is because the S&P has traditionally had 20% of their stocks being financials. That has changed in recent days ... it dropped to 17.64% on January 1st. and is lower than that percentage now.)

This is the chart of the Banking Index (BKX) going back to 2003.

Note the precipitous fall that has occurred. The index is still in a down trend and getting very close to making a 100% retracement of 2003's low.

China's Shanghai has had a huge drop since last October. For some reason, the media has pretty much ignored the event and has really said little about it.

Last night, the Shanghai Composite fell below a 3358.93 critical support. It is now only 1.64% from filling a downside gap. If it does not hold there, the Shanghai will be facing a large downside risk of falling much further.

 


 

Marty Chenard

Author: Marty Chenard

Marty Chenard
StockTiming.com
Asheville, NC 28805
Tel: 828-296-1200

Marty Chenard is an Advanced Stock Market Technical Analyst that has developed his own proprietary analytical tools and stock market models. As a result, he was out of the market two weeks before the 1987 Crash in the most recent Bear Market he faxed his Members in March 2000 telling them all to SELL. He is an advanced technical analyst and not an investment advisor, nor a securities broker.

StockTiming.com is dedicated to Stock Market Investors who want the best information on stock charts, stock market trends, stock market timing and technical analysis.

Be My Guest and Take Advantage of Our Free Membership ... Get a Free Membership to StockTiming.com ... Youll receive important daily messages before the market opens and direct links to todays important web pages. Information and messages that are often not posted on our website. There is no obligation or expectation on our part ... it is just our way of proving our accuracy and timing expertise to you. Please click here for your Free Membership.

Copyright © 2006-2014 Marty Chenard

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/