I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Thursday, April 18, 2013

Apr 18

I think we are in the midst of a decent correction. One of the reasons why I think so is that we have an approximately month long short-term VIX divergence. This has tended to signal a decent correction in the past.

However, this same chart is yet another reason why I don't think this is a major top / end of the current cyclical bull. The last recovery high happened in conjunction with a new VIX recovery low. We are still not seeing the several month / year VIX divergence that occurred with the 2000 and 2007 peaks. Does this have to happen? No. But I think the odds that we do have a major top without a major VIX divergence is low. And so this is one reason (among many others) why my expectations are for a continuation of the cyclical bull.

blog comments powered by Disqus