Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Prepare For Unknown Stock Market Price Action As New Highs Are Reached - 23rd April 19
Silver Plays a Small but Vital Role in Every Portfolio - 23rd April 19
Forecasting 2020s : Two Recessions, Higher Taxes, and Japan-Like Flat Markets - 23rd April 19
Gold and Silver Give Traders Another Buying Opportunity - 23rd April 19
Stock Market Pause Should Extend - 21st April 19
Why Gold Has Been the Second Best Asset Class for the Last 20 Years - 21st April 19
Could Taxing the Rich Solve Income Inequality? - 21st April 19
Stock Market Euphoria Stunts Gold - 20th April 19
Is Political Partisanship Killing America? - 20th April 19
Trump - They Were All Lying - 20th April 19
The Global Economy Looks Disturbingly Like Japan Before Its “Lost Decade” - 19th April 19
Growing Bird of Paradise Strelitzia Plants, Pruning and Flower Guide Over 4 Years - 19th April 19
S&P 500’s Downward Reversal or Just Profit-Taking Action? - 18th April 19
US Stock Markets Setting Up For Increased Volatility - 18th April 19
Intel Corporation (INTC) Bullish Structure Favors More Upside - 18th April 19
Low New Zealand Inflation Rate Increases Chance of a Rate Cut - 18th April 19
Online Grocery Shopping Will Go Mainstream as Soon as This Year - 17th April 19
America Dancing On The Crumbling Precipice - 17th April 19
Watch The Financial Sector For The Next Stock Market Topping Pattern - 17th April 19
How Central Bank Gold Buying is Undermining the US Dollar - 17th April 19
Income-Generating Business - 17th April 19
INSOMNIA 64 Birmingham NEC Car Parking Info - 17th April 19
Trump May Regret His Fed Takeover Attempt - 16th April 19
Downside Risk in Gold & Gold Stocks - 16th April 19
Stock Market Melt-Up or Roll Over?…A Look At Two Scenarios - 16th April 19
Is the Stock Market Making a Head and Shoulders Topping Pattern? - 16th April 19
Will Powell’s Dovish Turn Support Gold? - 15th April 19
If History Is Any Indication, Stocks Should Rally Until the Fall of 2020 - 15th April 19
Stocks Get Closer to Last Year’s Record High - 15th April 19
Oil Price May Be Setup For A Move Back to $50 - 15th April 19
Stock Market Ready For A Pause! - 15th April 19
Shopping for Bargain Souvenirs in Fethiye Tuesday Market - Turkey Holidays 2019 - 15th April 19
From US-Sino Talks to New Trade Wars, Weakening Global Economic Prospects - 14th April 19
Stock Market Indexes Race For The New All-Time High - 14th April 19
Why Gold Price Will “Just Explode… in the Blink of an Eye” - 14th April 19

Market Oracle FREE Newsletter

Top 10 AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

What happens to the Stock Market when VIX closes below 14

Stock-Markets / Volatility May 10, 2018 - 03:01 PM GMT

By: Troy_Bombardia

Stock-Markets

VIX closed below 14 yesterday for the first time since February 1, 2018. This study examines what happens next to the stock market (historically) when VIX closes below 14 for the first time in at least 3 months.


Here are the historical dates:

  1. March 21, 2016
  2. January 4, 2013
  3. August 13, 2012
  4. June 23, 2004
  5. June 28, 1996
  6. May 19, 1992
  7. November 13, 1991

Here’s what happened next to the S&P 500

March 21, 2016

This occurred AFTER the S&P 500 had already finished its “significant correction”. The correction’s bottom was already in. The S&P swung sideways for the next 3 months before rallying higher.

January 4, 2013

This occurred AFTER the S&P had already finished its 8.8% “small correction”. The correction’s bottom was already in. The S&P 500 continued to rally higher nonstop.

August 13, 2012

This occurred AFTER the S&P had already finished its 10.9% “small correction”. The correction’s bottom was already in. The S&P began another “small correction” 1 month later, but the stock market’s downside was limited.

June 23, 2004

This occurred BEFORE the S&P had finished its 8.8% “small correction”. The correction’s bottom was not in, and the stock market made a marginal new low. But the important thing here is that the stock market’s downside was limited.

June 28, 1996

This occurred near the beginning of the S&P 500’s 11% “small correction”. This historical case doesn’t really apply to today because the S&P has already made an 11.8% “small correction”.

May 19, 1992

This occurred AFTER the S&P had already finished its 6.8% “small correction”. The correction’s bottom was already in. The stock market swung sideways over the next 5 months, but trended higher over the next 6-8 months.

November 13, 1991

This occurred 1 day before the S&P began a 6.7% “small correction”. This historical case doesn’t apply to today because the S&P has already fallen 11.8% from the top to bottom of the current “small correction”.

Conclusion

This study’s conclusion is simple.

  1. The stock market might have a little more downside over the next few weeks (i.e. within less than 2 months). This is a 50-50 bet.
  2. But the stock market trended higher in the next 6-12 months in ALL of these historical cases.

This is a medium-long term bullish study for the stock market right now.

By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Copyright 2018 © Troy Bombardia - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - 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

6 Critical Money Making Rules