S&P/Volatility Ratio Still Strong

SPX Monitoring purposes; Long SPX on 3/24/21 at 3889.14.           

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

Long Term SPX monitor purposes; sold long SPX on 1/15/21 at 3768.25= gain 10.80%; Long SPX on 10/26/20 at 3400.97.

In the past we mentioned the possibility that a “Three Drives to Top” may be forming but so far we are not seeing any weakness to support that pattern, at least not yet.  The bottom window is the Correlation (SPX, VVIX); readings above .50 have been a bearish sign; current reading is -.72 and not near the bearish level.  Next window up is the SPX/VIX ratio.  This ratio normally shows weakness before the SP and right now it's still acting strong.   SPX is setting right near the highs and not backing away suggests market may “eat through” the resistance and head higher. Long SPX on 3/24/21 at 3889.14. 

Market is in a strong position.  The bottom window is the stocks above their 50 day average in the SPX which stands at 82%.  Next window higher is the stocks above their 200 day average in the SPX which stands at 94%.  Stocks usually weaken first before an intermediate term top starts to form and that is not happening here.  Can have a 3-5% pull back here, but unlikely a 10% or greater pull back. 

The bottom window is the 18 day average of the Advance/Decline percent for GDX and next window up is the 18 day average for Up Down Volume percent for GDX.  Important lows have formed by GDX when both indicators close below -30.  The chart above goes back to mid 2015 and the red arrows show when both indicators dropped below -30.  Of the eight signals going back to 2015 there was one failure (October 2016) 87.5%.  Some signals wiggled a bit lower or sideways before the rally started, and that may happen here.  Both indicators suggest market is close to or at a low.  Long GDX (10/9/20 at 40.78).

Disclaimer: Signals are provided as general information only and are not investment recommendations. You are responsible for your own investment decisions. Past performance does not guarantee future ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.