Here we go again…
The Volatility Index
(VIX) is sending yet another warning sign.
It was just two weeks ago we noted how the VIX was approaching its lower Bollinger Band. It was setting the stage for two possible outcomes, both of which were bearish for the broad stock market.
Today, we’re looking at those two possible outcomes again. Here’s an updated chart of the VIX…
For the fourth time over the past two months, the VIX is testing the support of its lower Bollinger Bands. On the three previous times, the VIX bounced off of support and that bounce coincided with a short-term, modest decline in the broad stock market.
Now… here we go again for the fourth time.
Just as it was two weeks ago, there are two ways to go from here. And, both are bearish.
If the VIX continues to fall, then it will dip below its lower Bollinger Band. That action will set the stage for a broad stock market sell signal when the VIX closes back inside the bands.
On the other hand, if the VIX finds support right here and starts to bounce, then that bounce will likely coincide with another quick decline in the stock market.
Either way, the broad market looks vulnerable to a lower move from here. It’s just a question of how much lower.
Best regards and good trading,
Jeff Clark
P.S. More volatility means there’s more downside to come – and now is the perfect time to take advantage of volatility.
That’s why I created my 3-Stock Retirement Blueprint, where I focus on just three stocks and use options to profit off of the trends in those stocks. It helped me retire at the age of 42. And, I expect it could be equally as profitable and guiding for you as well, especially during these times.
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Reader Mailbag
In today’s mailbag, Jess and Joe thank Jeff for his trading guidance…
Hi, I’m glad to be a member! Trading is totally new, and a bit intimidating, to me. I have a huge time horizon and I’m willing to tolerate risk. I’m eager to learn and make us lots of money!
Also, I’m on active duty in Fort Bragg, North Carolina. If all goes well, I’d love to advocate for you on base since there are so many young soldiers who could benefit greatly from your guidance.
– Jess
Hey Jeff, I wanted you to know I enjoy your updates. I know the market has been going nuts the last few weeks and I appreciate your honesty when you don’t know what’s going to happen. I look forward to your daily updates. Thank you for the time you put into writing them out.
– Joe
Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at [email protected].