Whilst the ongoing conflicts in both the Ukraine and Iraq are beginning to impact world markets, yesterday’s price action was less severe than expected. In other words, the price action was more of a pause than a major sell off.
Whilst everyone’s attention on Friday was focused on the monthly circus which is the NFP, the VIX on the other hand slipped quietly and almost unnoticed below the 11.00 price point on the daily chart, to close the week at 10.73, its lowest level for many years.
If, like me you have had to take a break from trading and the markets, it can sometimes be difficult to pick up the threads and re-orientate yourself to the emotional state of the market. And perhaps the best place to start is with the major indices, in particular the VIX, the Dollar Index and the NASDAQ.
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It’s been an interesting few weeks for equity markets, with the usual crop of doom and gloom ‘experts’ emerging from the undergrowth to call the top of the market, before disappearing equally quickly, realizing that they were wrong
Looks like the markets just about managed to avoid a mauling by the bears, who have now temporarily retreated to lick their wounds!
Whilst as traders and people, we all tend to make New Year resolutions. The market however seems set to continue in the same vein as in 2013, with the primary focus remaining the constant debate of tapering, and as I have said before, what I call ‘tweaking’.
With markets having been given a more or less clear roadmap for the future of QE, and so removing a degree of uncertainty, it now only remains for us to monitor closely our benchmark charts, namely the USD index and the VIX , whilst keeping a close watch on price action and volume.
With the long summer days now coming to an end, it’s time to re-visit that perennial gauge of market risk, the VIX for a view of whether the equity market is indeed over bought, and likely to reverse dramatically.
