Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Low VIX...Low Volume....Disconnect Widens...Negative Divergences On Daily Charts...

Stock-Markets / Stock Markets 2016 Aug 09, 2016 - 12:24 PM GMT

By: Jack_Steiman


The market is getting more and more boring as volatility gets lower and lower. This is due to complacency setting, which is causing the VIX to drop while volatility falls off the earth. This can play on the emotions of traders as things barely move, and they get bored, which causes over playing and more poor choices for their trading portfolio. The market grinds higher as a bull market gets more mature due to the bears leaving the game for the most part. All that is left are the bulls. But let's face it, most are in the game. Don't let anyone tell you otherwise. With the bulls in and the bears gone, there's not much to move the averages one way or the other, so the market trades in very thin ranges for most of the day and most of the time as well.

This is when you need to be especially careful, so don't get to the point where you think things aren't going as you would like them. If you know what to expect then you can adjust your trading, and lose the emotional part that causes you problems. If the market continues to grind higher, we may see what's currently in the 11's move well below 10, and if you think the trading range is thin now, you won't like a sub 10 VIX, my friends. You will be beyond bored, and, thus, things will get even more dangerous emotionally, so be careful. Again, adjust to what's in front of you each and every day. The complacency is causing the low VIX. The price you pay as bull markets grind along inappropriately.

We now have six straight quarters of declining earnings, and, yet, the market keeps playing with new highs almost daily. The disconnect is getting more and more out of control. There are no signs that this problem with earnings is going to improve any time soon. If you add in the awful negative divergences we're now seeing on the daily index charts, plus the continued global slow down for the most part, you can't help but wonder how long low rates by themselves can keep carrying the market upward.

It makes me more and more nervous every day to be long anything, to be honest. This will all end so very badly someday, but that someday is an unknown day. No way to predict how long the market can remain controlled by the fed without falling apart. Someday the market won't care what the fed is doing and simply fall to pieces. But, again, there is no formula for understanding that moment in time when the nonsense ends. My fear is when it does it will, as usual, catch the masses off guard. No one will see it coming. No signs of it, yet, at all, but as day turns to night, it's out there and will arrive unexpectedly.

Through the years, when the market wasn't controlled by the fed, when the negative divergences we're seeing on the daily and monthly charts existed, it wasn't long before the market took an absolute beating. The Dow, at an equal high has a MACD that's 100 points lower than the last high. The negative divergence thus is of the severe variety. Normally, without fed control, the market would fall apart with such nasty negative divergences. It hasn't happened. Not yet anyway. Amazing to see how this holds up. The divergences are on so many key time frames it makes you sit in disbelief when you wake up and see the futures hanging strong.

All I can say is be careful out there, folks. The market may continue to ignore its plethora of problems, but know they're out there, and, thus, respect them. 2134 is all the bulls and bears care about. Above, it's still rock and roll time for the bulls.



Jack Steiman is author of ( ). Former columnist for, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Sign up for a Free 15-Day Trial to!

© 2016

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

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