Wait of the Evidence? Jenga!

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Tags: Volatility, VIX, investment, stock market, technical analysis


July 15th (arrow) showed the VIX spike that inaugurated the current bear market rally, which has a signature uptrend on the SPX. Is anything below VIX 24 bullish?
__________________________________________SP500 with a rising trendline, and holding the 1275-1280 support zone
_______________________________________________SPX:VIX ratio on the mend (bullish)...the RSI14 has held 50 during the bounce
_____________________________________________The percentage of NYSE stocks above the 50 period average is another measure of oscillation of market sentiment. It's working its way back up, just as we are 23 days into the rally.
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I don't remember where I got this, but I think it's the Miller Index, the number of stocks above the 200 day average now, versus ten days ago. Naturally, it has risen, from 1495 to 1938. I don't think it's the absolute number but the relative direction.

As my son is quick to remind me, markets have limits to fear, but not to greed. I suppose that reflects Vernon Smith's behavioral finance finding of experimental subjects' tendency to recreate bubbles. But it's more than that in socialized markets where governments NEED rising stock market prices to fund their policies (like bailing out FNM and FRE). That's why Hanky Panky is there to use taxpayer dough to prop up the housing market, and Bailout Ben has sleepless nights thinking about new ways to inflate credit.

What's the ultimate problem? Somebody described our economy as based on selling homes at higher prices to each other, and using the equity to buy stuff. In other words, the housing bubble (via the credit bubble) allowed mortgage equity withdrawal (MEW) to stimulate the economy. Of course, when the game changed via fraudulent loans and securitization with innovative investment products, the game simply went Jenga!

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Educational use only. Never intended as investment advice.