Panic Bottom - It's All In The Chart

SPX Monitoring purposes; Long SPX on 3/25/22 at 4543.06.

Monitoring purposes GOLD:  Long GDX on 10/9/20 at 40.78. 

Long Term SPX monitor purposes; Neutral

We updated this chart from yesterday. We said yesterday, “The top window is the 2 day (Rate of Change) for the VIX; readings above 25 on this indicator (current reading is 26) suggests a low is near; happed 8 times since last May with one failure which works out to 88% success rate.  The pattern forming on SPX could be a Head and Shoulders bottom where the Right Shoulder is completing now. This potential Head and Shoulders bottom has an upside target to 5150 which would be a new high.  Don’t have it shown but NYSE Summation index needs to see +1000 range near mid May for a bull market signal (on a previous report) for 2022 other wise sideways market at best this year.”  Added to above, Today’s light volume test of Monday’s low is a bullish sign suggesting bottom is forming.  

VIX measures the fear in a market and the VVIX is the VIX of the VIX. So the VIX/VVIX ratio is a good indicator that can define panic and panic only forms at bottoms in the market.  The acceleration of the VIX/VVIX ratio helps to pin point where all the panic is occurring.  The bottom window is the “Rate of Change” (ROC) of the VIX/VVIX ratio and high readings above +10 suggests panic (high came in yesterday +15).  Next window up is the Percent B.  The percent B shows when it above its upper Bollinger Band (>1) or below its lower Bollinger band (<0).  Percent B of the VIX/VVIX reached above +1 a couple of days ago suggesting VIX/VVIX ratio has gone up to fast and is due to normalize.  Top window is RSI for the VIX/VVIX ratio which also measures acceleration and shows excess with readings reach above +70 (current reading is 84).  We marked with red lines the times when all three indicator for the VIX/VVIX ratio reached bullish levels.  Will this time be different,?  Ask for free 2 wk trial.   Join us on twitter. @OrdOracle  

The top window is the Inflation/Deflation ratio.  Last week it closed above its previous 2020 high suggesting a breakout.   Right after that high, it tumbled the next four  days creating an “Up thrust” suggesting a consolidation is starting.  If the Inflation/Deflation ratio starts a consolidation so will the XAU (GDX).   As pointed out in yesterday’s report, the pattern that may be forming on XAU is a Head and Shoulders bottom where the Head is the October low.  Head and Shoulders pattern have symmetry both in time and price. The Left Shoulder formed over 5 months and suggests the Right Shoulder may take as long and could complete in the October or November timeframe.   Still a bull market but sideways action over the next 5 or 6 months is possible.