Leading indicators that send signals about emerging trends across (global) markets is what we are focused on in our research. One of our leading indicators is a set of 6 distinct volatility indexes which we feature every weekend in our Trade Alerts premium research service (weekend commentary about markets). All 6 volatility indexes are sending a bullish signal and some of them are strongly bullish for stock market investors.
Three weeks ago, we noticed the first early bullish signs in our volatility index research. Last week, we got stronger signals, still quite hidden, when we mentioned that Growth Stocks Are More Attractive Than Your Feeling Might Suggest
All this suggests that a bottom is set in the Nasdaq. Best case, this is not just a local bottom but a turning point.
Remember, in terms of leading indicators, as explained in great detail in How To Forecast, the growth stock volatility index starting showing a topping pattern, already several weeks ago. Last week marked “the start of a breakdown of epic proportions” is what we reported, and on Friday July 15th we got a confirmation of this.
The growth stock volatility index confirmed a breakdown which makes us convinced that growth stocks are about to outperform markets. It also sends a bullish signal to all other markets and indexes. It is a must-see chart which is available in the restricted area (premium Trade Alerts research).
The S&P 500 volatility index (VIX) is lagging but is trending in the same direction. An 18 month pattern is almost broken now, this is bullish for stocks.
No surprise, this VIX breakdown is happening exactly the same day as the USD hit 108.9 points, the highs of September 2002, presumably a turning point.
It is imperative to always zoom out. Successful investing is about constantly zooming into the details and zooming out to see the big picture.
Moreover, while our research team is always looking for chart signals and chart structures, we often check the clean version of a chart (without annotations).
When we look at the simplest and cleanest chart version of the VIX volatility index, weekly timeframe, it is so clear how this volatility index is topping now. A move towards 20 points is in the making, we are hoping that VIX will fall below 20 points to ensure that markets calm down and bring relief into the investor community.
Sign up to our Trade Alerts premium service and receive (a) the daily ‘Algo Alert’ featuring highly accurate support / resistance / trend change levels in the S&P 500 (also SPXL + SPXS ETFs) (b) weekend analysis featuring 6 volatility indexes (c) access to auto-trading SPXL/SPXS or SPY options.