While the trend channels i have drawn are not very precise they give a relative perspective on the positive correlation between the trending move in US stocks and the decline in Volatility.
The more important point I try to study in those charts is that both stockas and Volatility are intoa horizontal range that rules for the time being. As I pointed out last week S&P has a solid Support around 875-885 and Resistance is defined by the recent consolidation below the 960 high. There is a pending Golden Cross of the 50 & 200-Day MAs which will bring major media attention and will force retail accounts and mutual funds to pour into stocks.
The contrarian within whispers there will be a fireworks and some euphoria before the imminent break.However it is adviseable to wait and see if we can touch the 1000 mark on the wings of media and public sentiment shift from crisis fear into "the bad is already in the past" theme.
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