ASX Index (XJO) vs. Aussie VIX (XVI) ~ Inverse CorrelationAussie Volatility Index wreaking havoc on ASX.
XJO ~6500 range & XVI ~20 range marked out as area(s) of interest for potential supply/demand dynamics, TBC.
XVI
ASX200 $XJO Are we heading for a bear market? Good Evening, investors and traders, the Asx200 $XJO went lower again due to market uncertainty with the coronavirus.
Last week, I said if we breach the 50 moving average, the first level of support is around 6300-6400.
The market went straight down to 6259.9 on Monday and traded sideways between 6259-6500 for a few days and eventually making a new low of 6216 at Friday's close.
Next week, I am watching 5800-6100 as a very important area of support. (Currently, I do forecast a dead cat bounce from there)
Furthermore, the ASX200 $XJO must close above or near the 200 MA (red line). If not, we are more likely heading for a bear market.
One important thing to keep in mind is that the VIX is at a bearish high reading.
This tells the mid-large fund organizations such as investment banks and hedge funds to reduce risk and exposure in their long/short portfolios.
The good news is that we do have a TD 9 coming for the Vix and this signal a likely top for the short term.
Therefore, like the hedge funds and investment banks,
I am still only risking a small amount of money in the market. I will go big again WHEN the Vix is below 15 and price level can close above all moving averages. At the moment this price area is around 6666-6800.
Glossary:
VIX
The S&P/ASX 200 VIX Index ( XVI ) calculates the amount of volatility expected in the market over the next 30 days.
• High readings indicate uncertainty ( bearish ) 20-30
• Normal readings suggest a slight bullish bias 15-20
• Low readings indicate low volatility ( bullish ) and strong investor confidence. <14.99
Bear market
A bear market is a condition in which securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment.
