June 3, 2020
By Mish Schneider
If you did not get a chance to read my blog on the 1960’s from June 2nd, please consider doing so.
Just when the market is hitting euphoric conditions, any expansion of the protests, the violence or in the number of COVID-19 cases, could unravel the market quickly.
The Volatility Index of VIX, is sitting just above the 200-DMA. What I am watching for, is 60+ day reversal in that instrument.
That would serve as an early warning sign.
You might also consider going back and reading my May 10th blog on why the bullish dollar theory is flawed.
Now that the dollar has fallen precipitously since then, those 10 reasons I state continue to age well.
Particularly Reason 2: “rising unrest to the point of calls for a civil war and perhaps revolution, in the US and globally, including China,” resonates right now.
Hence, for precaution, we look at the volatility index.
The green line is the 200-DMA that comes in at 24.47.
The ideal situation would be either a new low under or around the 200-DMA, then a reversal in price, with a rally to close near an intraday high.
Then, we would have a good risk to a low established near the 200-DMA.
Plus, notice that the gap up from mid-February remains intact.
Regardless, the price of VIX currently is well underperforming the SPY.
Plus, the momentum is declining showing no divergence between current price and real motion.
I believe we are heading into a buy zone in the VIX. It will just be a matter of the best setup from here.
And of course, watch the Economic Modern Family. If they rock, the fear continues to elude.
Check out my 2 short commentaries on 2 different Chinese TV station
Russell 2000 (IWM) 140 is pivotal. 147.25 big resistance
Dow (DIA) 263.20 resistance with 260 support
Nasdaq (QQQ) I hope you played those all-time high cards. 237.47 matched exactly
KRE (Regional Banks) 41.34 resistance 40 pivotal 35 must hold
SMH (Semiconductors) 144.96 the gap got filled now support
IYT (Transportation) 164 must hold
IBB (Biotechnology) Until it takes out 136 noise
XRT (Retail) 43.50 resistance. 40.70 support