As a long-term inventory dealer, one growth within the inventory market takes me and plenty of others to our collective knees. It is a Volatility Index ($VIX) that rises previous 20. There has by no means been a bear market that is unfolded with a VIX that continues to be under 20. FEAR, apart from the apparent worth decline, is the frequent denominator in each bear market decline.

I’ve proven this VIX chart many instances, however now that the VIX has soared for the reason that Fed assembly, it is definitely an acceptable time to remind ourselves of 1 easy market truth.

Inventory market efficiency is at its absolute worst with a VIX above 20. Try the chart under.

This could a minimum of open your eyes to the potential of decrease costs. These calculations date again to S&P 500 ($SPX) efficiency after April 10, 2013, when the S&P 500 cleared the double prime from 2000 and 2007, confirming a brand new secular bull market was in place.

The rally since Monday’s opening bell has been good, however only a few key resistance ranges have been cleared. Early checks are right here, or quickly approaching, proper now. Let us take a look at a number of key indices on an hourly chart. Many instances, the declining 20-hour exponential shifting common (EMA) supplies stable near-term resistance, stopping the preliminary bullish wave in its tracks. Have a look:

S&P 500 ($SPX)

NASDAQ 100 ($NDX)

Semiconductors ($DJUSSC):

Failing at these key resistance ranges doesn’t suggest a bear market is underway. It merely will increase the chances that the resistance ranges offered might be tough resistance to beat initially. Likewise, a break by means of above key short-term resistance is not a precursor to new all-time highs across the nook. I am merely watching these ranges as a “piece” of the Q3 puzzle, attempting to find out whether or not the chances of an extra decline are rising or reducing.

9 days in the past, I held a “Why the S&P 500 Could Tumble” webinar, offering members with a ChartList of assorted worth and financial charts they need to watch in figuring out the chance of an enormous decline. That webinar paid off handsomely as our EB members had been in a position to plan forward for the rising odds of a major market decline. Now members, not too surprisingly, are asking in droves whether or not this can be a pullback to purchase again shares cheaper or if that is extra prone to be a a lot deeper correction or perhaps a bear market that is growing.

These two decisions are miles aside and getting this subsequent step proper would be the distinction between a really painful Q3, one wherein some huge cash is perhaps misplaced, or organising a type of “shopping for alternatives of a lifetime.”

I am unable to reply all of our members’ questions separately, so late yesterday afternoon, I made a decision to host the apparent subsequent step webinar, “HUGE Promoting and Rising Worry: Pullback or CRASH??” It is a members-only occasion and it’ll start at 4:30pm ET, simply after at this time’s shut. Should you’re not a member, however wish to attend, we have you lined. Merely CLICK HERE for extra info and to register as a FREE 30-day trial member.

That is one other HUGE occasion and I might like to see you there!

Glad buying and selling!

Tom