August 14th 2024 – The price of the VIX index, the eminent volatility index that displays the level of fear priced into S&P 500 options, continues to exhibit a positive medium-term trend reports Trend Intelligence, as the index recently fell from over 60 in the first week of August to now below a reading of 18.
Trend’s Analysis (click chart to expand): In our VIX index chart, Trend Intelligence uses its M* Momentum Indicator to report positively trending M* and M* Signal lines, with both indications operating above their critical zero line. This is, and has shown over time to be, a positive trend signal.
In addition to the M* indicator, price currently trades above 2 of Trend’s moving averages and within our Japanese Cloud indicator, shaded in pink.
The combination of these signals corroborates Trend’s positive medium-term trend rating on the VIX index, as we project positive price jumps in the index in the future weeks ahead.
Downside Sentiment: The great volatility spike of 2024 was a ‘head-fake’ and caused by a sudden wave of deleveraging on Wall Street rather than a collapse of economic confidence. Now the markets suggest that calm is set to return to US stocks, reports Bloomberg.
Upside Sentiment: Volatility could continue as uncertainity about the US economy, its election cycle and wars in the middle east and Ukraine consume investor sentiment. Front of mind for portfolio managers is the state of the U.S. economy, as fears of a recession grow after the U.S. unemployment rate jumped in July, reports Reuters.
Authored by: Trend Intelligence, London
