Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Sunday, October 28, 2012

Nasdaq vs VIX

Stock Market Technical Analysis Blog

Click on image to enlarge

I posted in the charts above, seven-year weekly bars charts of the Nasdaq & VIX (Volatility Index).  In next week's bar or the following week's bar of the VIX we will see the red EMA come into contact with the green EMA after six months apart.  Also, within the next two weekly bars we will have the red / green contact once again in the Nasdaq.

In the Nasdaq the bulls want the red to bounce back up from the green and the bears want it to pierce down through.  In the VIX the bulls want the red line to meet resistance at the green and turn back down and the bears want it to cross up through to the topside of the green.  Considering these are decent sized moving averages on weekly bars it is possible to take three to four weeks to get their line interactions resolved in one direction or the other.  By studying each line interaction on the Nasdaq chart at the top then looking directly below at the VIX chart you can easily see how they trade inversely virtually all the time.

New one to three month trends are usually established after the two lines have stayed together for a couple of weekly bars and start to separate again.  We will need to watch these charts over the next few weeks to see if an Xmas rally is in the cards.  


Blog Archive