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QuantitativeExhaustion
Mar 17, 2015 2:56 AM

US Equity Markets Artificial Lift Short

S&P 500 index of US listed sharesFXCM

Description

SKEW/VIX Indicator - OIL Volatility OVX

SKEW/VIX Index compare, is a new indicator that I built here on TradingView (you can read details how it was constructed in the related link below). When combining SKEW with VIX, we can see significant market tops/bottoms and displacement/divergence. As you can see in the chart, S&P has been in a tight upward channel since October, 2011. SKEW/VIX and Oil also marked a significant low in October, 2011. SKEW/VIX remained in upward trend from the low, and set many more highs until June 30 2014. It was in June, where Oil started it's panic selling, and eventually breaking the support stronghold held since the October 2011 low. From June 30, 2014 SKEW/VIX peak until now, both oil volatility index OVX and S&P volatility index VIX have risen significantly. With SKEW/VIX trending down toward a lower sub 5 level, I would call our S&P run since June 30th, an artificial lift. Eventually we will see a major correction.


VIX has been quietly trending upward. On this chart notice the higher lows.




Oil Volatility OVX has also increased volatility in the S&P and follows VIX closely.





Comments
pascal.lambrecht.522
You are correct stock market is in controle from the fed artificial lift by the centrale banks something is going wrong manipulate the vix is controle by the fed normale can not be so low normale level is always been 18 to 22 dollar ....?
QuantitativeExhaustion
VIX? normal range is actually 10 to 18. Now we have another player that's almost as big as Fed, ECB. ECB is now moving on a QE much like Fed Reserve.
elp
Starting in October 2014 price has been trying to break a 60 year trendline and was clearly rejected. It's been support and resistance multiple times in the past. I don't think price has the momentum to break it currently, believe it needs to correct inorder to go higher. Plus, looking at all two term US Presidents, expecially starting with Reagan, the average stock market bull run in their second term is about 2.5 years. I believe we could see a correction before 2500 es. Although I could be wrong.
QuantitativeExhaustion
Very good observations. You're correct. Does not look like we can get over the median channel without a correction.
Technician
Great piece JR, it seems that alot of indicators are pointing the same direction. I can add to this the ratio of NYSE Stocks making new highs over the SPX


The number of stocks trading above its 200-days moving average continues to diverge and deteriorate


The volatility studies of the TLT/SPX which is breaking higher
jangseohee
Triplets of bearish divergence are required to bring multi years of bull down
BobbyBlueShoes
Triplets shmiplits. What droth. All we need is a Yellen.
jangseohee
Yellen is playing with the chart!
QuantitativeExhaustion
Great studies to look over. Volatility is picking up everywhere and good stocks momentum is slowing.

It would be interesting to see a chart for stocks that have greater than 10% short interest, hitting new highs or breaking 50 Day Moving Average. We often see an indication of bad companies hitting new highs before market corrections.
jangseohee
hmm, i am new to SKEW, gotta read about it
i do have a monthly complicated relationship between Crude oil and SPX
tradingview.com/v/nI8Ct66n/
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