Volatility Edging Higher

Volatility Edging Higher

Yesterday, I noted some subtle internal weakness creeping in to the stock market, as fewer stocks have participated in each market rally over the last 12 months. The uptrend remains healthy, and it wouldn’t take much for the stock market to break out to new all time highs, potentially leading to more momentum traders chasing the market higher. However, there are signs of subtle deterioration under the surface. Today’s chart adds another piece to the puzzle. The Vix index in essence measures the level of volatility experienced by equity investors.

Read More

Summer Lull Coming to a Close

Summer Lull Coming to a Close

As stock markets continue to gently rise and volatility falls back to recent lows, investor confidence in the now-longest bull market in history is unshakable. Perhaps rightly so as many US equity indices are now breaking out to new all-time highs. While the US stock market continues to advance, European equities remain range-bound, while Emerging market equities are correcting sharply. 

Read More

The Transition from Greed to Fear

The Transition from Greed to Fear

Volatility has settled down following the huge spike in February 2018. However, the trend has shifted from down/flat to rising. Rising volatility and overvalued stock markets are a dangerous combination. Add in a healthy mix of investor confidence and you are set up for disappointing results. We could be entering a period similar to 1997-2000 when equities accelerated higher on increasing volatility into that famous 2000 market top, or the top could already be in place. If the latter is the case, the stock market is in trouble. 

Read More

Volatility is on the Rise

Volatility is on the Rise

Volatility is on the rise, a characteristic of late-stage bull markets. Stock markets have had one hell of a run but despite today's bounce, I think the top is in. If that is the case, it could be a long way down. Volatility as measured by the Vix Index, bottomed at 8.92% on 4th January 2018 and has been moving higher in recent months. The transition from greed to fear will likely catch many by surprise.

Read More