Equity Bear Trap Looming?

By Candy Matheson of Strawberry Blonde's Market Summary

Blogger & Retired Russell 2000 E-mini Futures Day Trader • Oct 26, 2016 at 2:43 PM EDT

Watch for a potential bear trap, inasmuch as price action and all three technical indicators have morphed into triangular patterns and are nearing their respective apex in readiness for a major breakout.

Background information on the SPX:VIX ratio can be found here. Equity volatility will elevate as long as this ratio remains below the 150 level (as of 1:45 pm ET today it has fallen below, once again, as shown on the following Monthly chart).

(Click on image to enlarge)

BUT, watch for a potential bear trap, inasmuch as price action and all three technical indicators have morphed into triangular patterns and are nearing their respective apex in readiness for a major breakout, one way or the other, as shown on the Daily chart below.

(Click on image to enlarge)

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