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S&P 500 Undermined

Published 02/06/2019, 05:04 PM
Updated 07/09/2023, 06:31 AM
ESZ24
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VIX
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Take a look at the snooze-fest that constitutes Wednesday's trading. For hours, the ES did little but bobble between +0.50 and -0.50. Boring with a capital B.

ES

Turn the page back to Christmas, About FIFTEEN TIMES more dynamism in the same period.

But the fact that the market is captured and dull isn’t big news. The VIX has gone from nearly 40 to 15. Obviously everything is as boring as hell. But let’s take a look at the very big picture. Pay close attention to that thick black line drawn on the long-term ES chart below. Pay particular attention to the fact the line is broken.

CBOE Volatility Index

Now let’s look at just the past five months. And this time I’d like to direct your attention to that yellow tinted area, which is the underbelly of the broken long-term trendline. We’re getting dreadfully close to it.

S&P 500

The China deal is the sword of damocles hanging over the market’s head. Folks pretty much accept that SOME kind of deal is going to be hammered out, although it probably won’t be anything that will change the course of human history. But this is a massive uncertainty for bulls and bears alike, and I, for one, will be glad when it’s finally in the rear-view mirror.

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