Elliott Wave Analysis On VIX Index And The SP500

By: Gregor Horvat | Fri, Nov 4, 2016
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What is VIX Index? It's an important market that gives you an idea how much fear is involved during bear market period on stocks, which is in play for the last few weeks. Well, what is interesting to me is that this market is selling off ahead of important US elections, but events like this can be trend changers. In other words, they can cause some reversals. Simply put, investors will adjust their positions which may have an impact on price move. So if trend will change on stocks, then this will be from bearish to bullish side.

Those who follow me closely will know that I am tracking final stages of a corrective retracement on S&P500 from August highs. It's a three-wave decline at the moment, so technically I would be expecting a bounce towards the end of the year.

S&P500, Daily

S&P500 Daily Chart

And if I look at the VIX index, then we can also say that price is in final stages of a current corrective structure, thus it also suggests a turn down, ideally from around 22-25 area on a continuation contract. Pattern on VIX tells me that the next important leg will be lower which is obviously matching with our count on stocks. Also, lets also not forget to mention an important trendline resistance on VIX, connected from 2016 highs.

VIX, Daily

VIX Daily Chart

 


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Gregor Horvat

Author: Gregor Horvat

Gregor Horvat
www.ew-forecast.com

Gregor Horvat

Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of www.ew-forecast.com, but before that he was working for Capital Forex Group and TheLFB.com. His feature articles have been published on: SafeHaven.com, FXstreet.com, Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu, Insidefutures.com, etc. He recently won the award on FXStreet.com for Best Forex Analysis in 2016. At www.ew-forecast.com he helps clients and educate them about the Elliott wave prinicple and how to label and track unfolding patterns in real time.  His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets such as candlestick patterns, MA, technical indicators etc. His specialty however is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other tools/indicators.

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