US Stocks blowing their top, ready to burst?
Below I overlayed the VIX on the S&P 500 over ~2.5yrs. As you'll see, the VIX moves almost perfectly inverse (opposite) to the the S&P500. That's the normal relationship.
Something interesting is happening.
In the last month VIX has traded WITH S&P500, shedding it's usual inverse relationship. In the least, VIX has gained, while stocks have gained. See the light blue line on chart. It's tough to see on long timeframe chart, but very profound on shorter timeframes.
This is important. Often before major macro crashes, the VIX begins rising before the crash actually occurs, instead of while the crash occurs. This rise in VIX is usually caused by participants buying VIX as insurance/hedging against a suspected market downturn.
I've read and heard about this pattern. But in my short 10yrs watching markets (particularly VIX) I've never got to see it. This is a major warning sign.
Great post bud do you have any resources you refer to when making trades.I am a newbiee when it comes to Stock's but i would like to learn more.I tend to understand crypto's a little better and now have a decent understanding of TA.
Here's a post i did on OMG TA, have a look it might be something that you can relate to.https://steemit.com/trading/@jsonkidd/omg-usd-technical-analysis
Hey @Jsonkidd The beauty of TA is it applies to every kind of macro market. Stocks, commodities, crypto, bonds, forex, you name it. It's all the same because TA predicts the emotion of the market. Since 90% of price action is driven by emotion (10% by funny-mentals), emotion is pretty much all that matters.
I had a quick look through your post, good post!
My premise with TA, Elliott, Fib, or any other analysis is to look for repeatable patterns. If one market has been following Elliott Wave models to a tee, I place great faith any forecasts derived from Elliott. If the market isn't, then I largely disregard that metric.
I find it funny when people hold great weight in certain indicators (say a 55day moving average), but when you run a 55MA on a chart the chart shows no correlation to the 55MA over time. Then what's the point of using that metric? My answer: None.
Look for markets showing highly reliable patterns for best results.
Quick note on your article, I pretty much entirely disregard oscillators like RSI, MACD, Williams, etc. All these do is tell info already known by the price on the chart. If price explodes up, Oscillators go up. If price crashes, oscillators crash. So they basically tell you what you already know from looking at the chart.
Enjoy the market journey. :)
Thanks a lot for taking the time to comment Mate, i really appreciate you doing so.I'll be sure to go in with this mindset
Btw what did you think of my TA , i recently did one for OMG does it look valid to you.Seeing that you might be more knowledgeable about these markets i would appreciate you're feedback.Cheers bud following you for more quality content.
https://steemit.com/trading/@jsonkidd/omg-usd-technical-analysis
Thanks! Had a look at your analysis, it follows rules of TA, however I don't see patterns that give me overwhelming confirmation one way or another. I don't see reliability in what OMG is showing on EMA's, MACD, or even consolidation (triangle).
When my analysis yields "direction inconclusive" I've learned to accept that I just don't know and stay away until I do. Even if I love or am emotionally charged by a given asset.
Thanks a lot Bud , follow up question for EMA .Is 55 EMA a good indicator for support and resistance on a daily chart?
As mentioned it all depends if the security is respecting it. :) If there's been no correlation between the 55MA and the security in the past, I'd ask why the future would be different.
For example I did analysis on BTC that showed it respecting the 150MA. I coulda thrown in the 140 or 160 and it would yield the same result because the averages are very similar.
That gets into the art of TA. Find the nugget for each security that has shown reliability and forget the rest of the indicators until they do as well. :)