Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022
Quantum AI Tech Stocks Portfolio Current State - 4th Jan 2022
The Alibaba Stock Market - 4th Jan 2022
Will Gold & Silver Be Investment Outcasts in 2022 Again? - 4th Jan 2022
Stock Market Happy 2022 Entry - 4th Jan 2022
Complete paradigm shift will make Gold the generational trade - 4th Jan 2022
Corsair MP600 NVME2 1tb Drive Sudden DEATH Failures - Back Up NOW! - 4th Jan 2022
AI Tech Stocks Portfolio Updated Buying Levels and Zones Part 2 of 2 - 3rd Jan 2022
Stock Market Sentiment Speaks: 2022 Can Be Your Best Year Ever - 3rd Jan 2022
2020-22 - Soaring costs of the West's Pandemic failure - 3rd Jan 2022
AUTODESK (ADSK) - CAD - Metaverse Stock Analysis Investing for 2022 and Beyond - 2nd Jan 2022
Stock Market Sector Themes In Play For 2022 - 2nd Jan 2022
Excuse Me Mr Gold. What Year Is It? - 2nd Jan 2022
Stock Market Early 2022 Should Continue Melt-Up Trend In January / February - 2nd Jan 2022
UK Energy Crisis WARNING 2022 - How to Avoid Huge Increase in Gas and Electric Fuel Bills Right Now! - 1st Jan 2022
Why You Need A PR Expert For Your Financial Startup - 1st Jan 2022
TENCENT- Chinese High Risk GAMING Metaverse Stock Analysus for Investing 2022 and Beyond - 31st Dec 21
Gold Price Forecast 2022 - The Golden Year - 31st Dec 21
Will 2022 Be Better for Gold Than 2021? - 31st Dec 21
Gold Stocks – Wishing And Hoping (And Losing) - 31st Dec 21
Sheffield Christmas Market 2021 SANTAS GROTTO at Peace Gardens, City Centre Sights and Sounds - 31st Dec 21
Nvidia Leaves planet Earth - AI Tech Stocks Analysis - 30th Dec 21
Google (Alphabet) AI Tech Stocks Analysis - 30th Dec 21
Stock Market Santa Rally Challenge - 30th Dec 21
Sheffield Christmas Market Stalls, Sights and Sounds 2021 - 30th Dec 21
Investment Roadmap for 2022 - 30th Dec 21
2022 – The Year of (Gold) Inflation? - 30th Dec 21
Overvalued Stocks and Housing Perfect Storm for Gold - 30th Dec 21
My Most surprising Crypto call to date - 30th Dec 21
What is a Rehab Clinic and How It Is Beneficial for People? - 30th Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market VIX Indicator Pointing to Final Capitulation Lows

Stock-Markets / Volatility Jul 17, 2008 - 12:26 AM GMT

By: Marty_Chenard

Stock-Markets

Best Financial Markets Analysis ArticleStaggered capitulation indications are now coming in from market indicators ...

Everyone is looking at the VIX (Volatility Index) and wondering where and when it will show the capitulation that the Pit Traders have been looking for.


Signs of capitulation can be seen on more than one indicator ... not just the VIX.  Watching other indicators is especially important now, because the VIX is showing abnormal readings due to extreme and opposite sector volatility coming from energy, and financials. (The extreme rises and swings from the oil and energy groups are offsetting the dropping financials and "dampening the rise on the VIX".)

So, this morning we will look at other market indicators that have correlated levels of capitulation to the market. These will be important to look at since the VIX is showing "out of context" movement due to sector extremes.

___________________________________________

The first indicator/index we will look at is the action on the New York Stock Exchange daily lows.  At the bottom of the chart below, I have also plotted the SPY (ETF for the S&P 500), so you can see the correlation.

Note that extreme "up spikes" often signal that a capitulation level is being reached.  This is more true when the New Lows are above 800 from an historical basis.

Since 2000, there have been 8 occurrences where the New Lows have gone above a daily close of 700.
- Four of those times signaled the final capitulation.
- There were two other occasions where the New Lows went above 700 and remained below 900, and then they were followed by a New Lows level exceeding 1,000 which were the final capitulation levels . (These resulted in a total of 4 readings.)  The previous time this happened was August 16th. of 2007, and the other occurrence was yesterday when the New Lows reached 1144. (The NYSE New Lows are posted every day on our paid subscriber site.)

So, from a New Lows historical basis, yesterday was at a level that correlated with a high capitulation probability.  However , this morning, the Labor Department reported that consumer prices jumped 1.1 percent last month.   This was the second largest monthly advance in 26 years. With the Fannie Mae/Freddie Mac problems, and this morning's huge inflation jump, there is a possibility that yesterday's New Lows historical reading could have more to go.  Past "New Low" spikes did not have the double punch of the aforementioned events, so we do not know the after effect these events will have on historical levels.

(Note that I have placed the blue vertical lines just before each event so that you can see the data without a line going through it.)   See the next chart ...


The Second Indicator: The VIX vs. the Leadership to Broad Market Stock Ratio ..

Every night, we do a measurement of the Ratio of Leadership and Broad Market stocks trending up or down.  From this, we create a Ratio that shows how the Leadership stocks are trending relative to the broad market.  The value of this indicator/index is that Leadership stocks always lead the market up and always lead the market down.  Large down spikes on the ratio correlate with the VIX and rightly so.

Since the VIX is moving with abnormal readings due to sector extremes, watching the action of the trending Ratio of Leadership stocks to Broad Stocks is important.  (The Ratio of Leadership stocks to Broad Stocks is posted every day on our paid subscriber site.)

The chart below compares the VIX spikes and the spikes on the Ratio of Leadership stocks to Broad Stocks.

During the past year, there were three events where the spikes in both indicators had occurred simultaneously as they should.  There was one event last October where the timing was off, but none the less, there was a VIX spike shortly thereafter.  What is truly puzzling here, is what is currently happening.  We just had the largest , one year spike down on Leadership stocks on July 7th., and the VIX had a meager rise WITH NO spike up.  Like November 2007, it is possible that the VIX will show a lagging relationship, and that the New Lows and the Ratio of Leadership stocks to Broad Stocks are showing a satisfactory level of capitulation.

Options expiration occurs this Friday , so by Monday we may indeed know if we have reached satisfactory capitulation levels.  And, ... on Monday, a new SEC rule is going into effect regulating shorting activity. That should act as a braking mechanism to market down movements.  (The new rule will be in effect through the end of July and may be extended through August.)

Do you have a friend or fellow investor that you think would appreciate receiving a link to this page of Today's Analysis"?

If so, simply click on the link below to quickly and easily forward an email link .  It is completely private, so we won't even know if you send one.   Send This Page To a Friend

By Marty Chenard
http://www.stocktiming.com/

Please Note: We do not issue Buy or Sell timing recommendations on these Free daily update pages . I hope you understand, that in fairness, our Buy/Sell recommendations and advanced market Models are only available to our paid subscribers on a password required basis. Membership information

Marty Chenard is the Author and Teacher of two Seminar Courses on "Advanced Technical Analysis Investing", Mr. Chenard has been investing for over 30 years. In 2001 when the NASDAQ dropped 24.5%, his personal investment performance for the year was a gain of 57.428%. He is an Advanced Stock Market Technical Analyst that has developed his own proprietary analytical tools.  As a result, he was out of the market two weeks before the 1987 Crash in the most recent Bear Market he faxed his Members in March 2000 telling them all to SELL.  He is an advanced technical analyst and not an investment advisor, nor a securities broker.

Marty Chenard Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Marc,
03 Aug 08, 13:04

Moreover, the Morgan Stanley capitulation indexs is near historic bottoms, see this chart:

http://investorsconundrum.com/english_edition/2008/08/%c2%bfare-we-close-to-a-capitulation-in-the-stock-market/


Post Comment

Only logged in users are allowed to post comments. Register/ Log in