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S&P500 vs VIX – Rounding Tops and Bottoms

Hi all,

Today I would like to follow up on this analysis, where I explain the rounding top pattern of the S&P500 and the rounding bottom of the VIX.

Furthermore, I made several trades yesterday (Tesla long after new BUY signal SuperTrend, Shake Shack long after 3 hammers, Apple and FB (rising wedge, gonna snap someday, once again, I’m a bit early though) short into the close, Exxon long after a hammer candle stick and I closed several long positions at profits of >2% in a day, entered on Tuesday, see here). I’m also looking at the banks in the USA (JPM, GS, BAC) as they did not participate in the FED exuberance yesterday…food for thought…without the banks, it’s not a real party.


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Back to the S&P500 vs VIX. If you haven’t read part 1 yet, then please do. It will make you understand this post a lot better.

So now we’re here testing resistance from the blue arc, where the S&P500 could face resistance in the 2288-95 area for today. VIX briefly dipped below the arc yesterday but managed to close above, in my view that’s a sign of strength (wishful thinking?).

Based on this pattern, we could expect a sell off of equities over the next few days (VIX up) if the S&P500 is not able to close above the blue arc resistance area 2388-95.

So today could be a key day to see if this pattern stays valid or if it breaks out to the upside. A break > 2392 activates 2400. A break < 2380 activates 2355. A break < 2355 and the SuperTrend triggers a new Sell signal. If that happens, not likely for today though, then I will add short positions. Not there yet.

Frequent readers know I’m bearish on stocks for the short term (into June 2100-2200 target) and bullish on VIX. For the long term (years), I still believe we should buy stocks, the flight to relative safety, into private assets and out of public assets (government bonds, the real bubble).


S&P500 vs VIX


 


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The following documentary shows 3 Cycles of Time that have a direct impact on our lives and investment decisions:

  1. Global Warming and the next Ice Age to come. CO2 will be reduced significantly, same as every cycle has happened so far.
  2. The bond market will collapse, interest rates will go up and stocks will boom.
  3. The cycle of wars, approaching the climax near 2020.

Although I saw this documentary for the 1st time today, it perfectly aligns with my view on how we should invest for the next couple of years:

Capital Preservation Fund

Check out the Documentary here: Documentary “Missing Links – The Cycles of Time” 


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