About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Thursday, January 15, 2015

Daily SPX & VIX

Here is an updated chart of the SPX plus the daily VIX (bottom panel) SPX

1) The market has broken both long term (from 2011) and shorter term trend support around
the 2000. This is the second time in three months that the SPX has broken longer term trend
support and, as you have guessed, indicates a laboring market.

2) As noted in the 1/6 post, the SPX has had trouble staying above the 2000 level since mid -
Oct. and here we are again, this time at SPX 1993.

3) However, the market has only threatened to break down in recent months and has not done
so yet. Given the powerfully consistent run up in the SPX since the latter part of 2011 with only
minor dips below trend, the market deserves respect until  there is a more decisive break.

4) On a momentum basis, the SPX is modestly oversold against its 25 day m/a for the shorter
run. The standard RSI is trending down and is approaching a somewhat deeper oversold and the
MACD is negative.

5)  The VIX -- a volatility index used by traders to measure fear in the market -- has been drifting
ever so slowly higher since Jul. with the occasional spikes when the market sells off. The low
level of the VIX  over Jun. /Jul. indicated nearly obscene player confidence and complacency
and is returning now toward more normal levels.

6) Traders who have gone long the market when the VIX has spiked above the 20 level in recent
years have been rewarded as part and parcel of a buy the dip in price strategy as the higher
VIX readings have proved transitory. Note of course that if the SPX is set to work lower, the
VIX will trend or even spike higher.

7) The broad market can be choppy over the first half of Jan. as investors tinker further with
asset allocation and portfolio equities strategy.

8) So far in 2015, my weekly fundamental indicators suggest a flat broad market relative to Dec.
and a slowdown in the erosion of sensitive materials prices (oil included). Naturally, this is only
a very quick snapshot
I have had a fundamental buy signal on this market since early 2009. I do not use a "hold"
signal, so the "buy" stays on until I get a sell signal. The fundamental buy has not saved
players from sharp corrections in both 2010 and 2011. Further, there has been decay in
the signal as the "easy money" part of the cyclical bull has apparently past and much more
risk must now be assumed as a trade off against positive return.

No comments: