Evidence shown here reveals The Daily Chart Pattern of the VIX showing a clear Rounded Bottom Pattern in place for 2019.
That saucer type bottom in the VIX thus could be very supportive of a sharp breakout to the upside in Volatility, which could be timed around the all important Federal Reserve Meeting this Wed.June 19
Market participants and analysts seem to be forming a "consensus" that the Fed will drop it's infamous "patient" language from it's policy statement, and thus set the stage for an interest rate cut, at their next meeting in July.
How the market reacts to whatever the Fed does on Wednesday afternoon however is the $64,000 question.
Thus,clues in the VIX Pattern already in place may give one powerful insights into what the markets reaction might be.
The "Saucer Bottom" pattern in the VIX,now almost 175 days building on the chart in 2019 clearly supports a potential sharp move down in the stock market, after the meeting results are known.
Thus, this conclusion. . 1 Look for a sharp breakout in volatility !
2. S+P 500 could be setting up for a violently quick move DOWN, after the Wednesday Fed meeting results are announced, a gap filling exercise,to test prior 2019 breakout support at 2811.
I think the Fed thinks the asset bubble is helping the base economy. The Fed has made it perfectly clear that it is happy to inflate and further balloon asset prices. It puts the stock market above the base economy because the new thinking is that the more overpriced everything is the more that drags up the base economy and the average American out of sheer desperation. In December/January it became clear that the Fed will not allow asset price readjustment to reflect real worth; their goal is that everyone still keeps trying to unattainably attain the hugely overinflated and absurdly overvalued asset wealth of the 1%. Perversely, they are probably right. That is all that keeps the US economy going at the moment. Blind optimism. Look at the figures month upon month of optimism, ongoing hiring, increased spending, living the dream......
So they also see this VIX pattern, have experts at the technicals... and will do everything possible again to make apples rise instead of fall when dropped....
PaulDeep19131
⋅
Great analysis as always.
I suspect a continuation on Monday/Tuesday of what we saw Wednesday/Thursday/Friday with little overall net movement in the major US indices; for that reason I wouldn't procure TVIX until late-day Tuesday or even (possibly) early Wednesday, as trading will await the 2pm Fed meeting and volatility may drop the TVIX value slightly until then.
I would place an 85% chance no rate cut comes on Wednesday. They will very likely await G20 results and further unemployment statistics before making a key move. As long as the Fed still remains "open" to future rate cuts (which he already stated he was in the previous meeting), I see a definite drop to 1st resistance (4-5%) then a bounce-back for the major US indices.
The July meeting will be significantly more of a crucial determining factor on what the indices will do thereafter. If he fails to drop rates by July I believe we could see close-to or near Christmas level index values.
supere
⋅
@zSplit, My sense is Monday thru early Weds will be divergent with most sectors bouncing around (gap creating and filling) in a range bound manner. However, the weakest sectors like IWM and XBI should sneakily begin their descent toward support cliff edges. vix likely to bounce around between 14.5 and 16.5 until the Fed meeting.
The_Unwind
⋅
@zSplit,
Thank you very much, for your very well informed market opinion,
supere
⋅
Something crazy happening with vix futures. Swings of +/- 7% all night.
Just would like to add my 5c to the post. I've noticed that GOLD is on the verge of breaking down, oil is trying to bounce off. Would that be a sign of S+P 500 spike up?
So they also see this VIX pattern, have experts at the technicals... and will do everything possible again to make apples rise instead of fall when dropped....