The CBOE Volatility Index (VIX) was down to 19.86 to close below the 20 level for the first time in 4 months.

The VIX, widely referred to as the investor fear gauge, had dipped below the 20 mark, 3 times in the 5 previous sessions, but bounced back at close. From the day after touching the high of 35.60 on March 17, the VIX is down by 44%.

The last time when the VIX was below the 20 mark was on Dec. 26 07, the S&P 500 Index (SPX) had closed at 1,497.66.

This week which ended on April 24 08, the SPX closed at 1,397.84 where again the VIX is below the 20 level and forming a Doji showing a possible double bottom chart pattern, signaling a market reversal.

vix4.jpg

As the VIX has an inverse relationship to the market direction on the charts, the SPX clearly shows that it is hitting resistance and couple with a strong negative divergence present between the price and the MACD Histogram. Could this be a confirmation to a falling market in the coming weeks?

spx.jpg

From this analysis alone, you can foresee that the coming week will interesting as investor will be looking forward to earnings reports from some notable S&P 500 companies, Exxon-Mobil (XOM), General Motors (GM), MasterCard (MA), Procter & Gamble (PG) and Visa (V). Can positive earnings results push the S&P 500 Index across the 1400 resistance level? Well, the entire market is waiting for a confirmation or else it will continue to travel sideways.

“Experienced investors will tell you there’s no ideal time to buy investment and, if there was, most people only recognize it with hindsight” - Annette Sampson

Popularity: 41% [?]

Don't want to miss a thing? Subscribe to my RSS feed!




You Should Also Check Out This Post:

More Active Posts: