Charts and Commentary
I will keep it simple and to the point today, because I am on my honeymoon in Mexico.
Below is a long term view of the VIX, Volatility Index.
Last year, I observed that the VIX had been going through a concentric circle pattern with precision ... see chart below and remember that when the VIX moves up, the market moves down.
First the first time since 2003, the VIX broke below the circle in September which meant that the market perceived lower risk and that it would move higher. This was accomplished through huge M3 injections by the Fed as they tried to stimulate the economy so we could avoid a recession. (This VIX pattern precisely held support a total of 11 times until September.)
This took the VIX "out of balance" and balance is always re-established given enough time. If you look at the chart below, you will see that we are at the juncture of an important testing point where the market could face considerable downward pressure.
If the Fed does not significantly increase M3 in the next few days, market risks will rise substantially.
(Paid subscribers: Please see your updates for the total analysis and risk conditions relative to Institutional activity.)
Please Note: We do not issue Buy or Sell timing recommendations on these Free daily update pages. I hope you understand, that in fairness, our Buy/Sell recommendations and advanced market Models are only available to our paid subscribers on a password required basis. Membership information