{"id":19495,"date":"2022-03-10T07:30:28","date_gmt":"2022-03-10T12:30:28","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=19495"},"modified":"2022-03-10T07:30:28","modified_gmt":"2022-03-10T12:30:28","slug":"lets-pass-on-this-buy-signal-for-now","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/lets-pass-on-this-buy-signal-for-now\/","title":{"rendered":"Let\u2019s Pass on This Buy Signal for Now"},"content":{"rendered":"

The Volatility Index (VIX)<\/a> generated a new buy signal after the market closed on Tuesday.<\/p>\n

But, much like the buy signal back in November<\/a>, this is a low-confidence buy signal. So, I’m not buying it just yet.<\/p>\n

Let me explain…<\/p>\n

VIX buy signals occur when the VIX closes above its upper Bollinger Band<\/a> (an extended condition which normally indicates extremely oversold conditions in the broad stock market), and then closes back inside the bands.<\/p>\n

The VIX closed above its upper Bollinger Band on Monday (right red arrow). It closed back inside the bands on Tuesday – thereby generating the buy signal.<\/p>\n

Take a look at the VIX chart…<\/p>\n

\"Chart\"<\/div>\n

But there are two problems…<\/p>\n

The first problem is the S&P 500 gapped 80 points higher on the opening yesterday.<\/p>\n

Traders who wanted to take advantage of the buy signal would’ve had to chase stock prices higher into that gap. That’s usually a bad idea since so much of the fuel for the new buy signal was spent on that opening blast higher.<\/p>\n

The second problem is that most of the other technical indicators we follow weren’t all that oversold on Tuesday’s close.<\/p>\n

For example, the McClellan Oscillators (NYMO and NAMO) closed Tuesday in a relatively neutral condition. And, following yesterday’s big stock market bounce, the oscillators are actually approaching overbought levels.<\/p>\n

In other words, there’s not much energy left to fuel a sustainable rally from here.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

That was the same problem we had with the buy signal last November (left red arrow). And following a two-day-wonder rally, the stock market started to fall, and the VIX started to rise again – until it generated another buy signal a couple of weeks later (blue arrow).<\/p>\n

I’m not bearish<\/a> on the market. The choppy action we’ve seen over the past several weeks will likely come to an end soon.<\/p>\n

And I agree with Market Minute<\/em> analyst Imre Gams’ comments on Wednesday <\/a>that the S&P 500 is forming a bottoming pattern. But it might take one more move lower in the market, and one more move higher in the VIX to complete that pattern.<\/p>\n

So, just like we passed on the VIX buy signal last November, traders should consider passing on Tuesday’s buy signal as well.<\/p>\n

But pay attention to the VIX chart… If it sets up another buy signal over the next two weeks, then that signal will likely prove to be a winner.<\/p>\n

Best regards and good trading,<\/p>\n

\"signature\"<\/p>\n

Jeff Clark<\/p>\n

<\/p>\n

Reader Mailbag<\/h2>\n

In today\u2019s mailbag, Jeff Clark Trader<\/em> member Alex thanks Jeff on his recent recommendation\u2026 <\/p>\n

\n

I took your advice and sold my gold shares last week to take a small profit. I’m waiting for the price to pull back as you predicted. Your insight is always appreciated.<\/p>\n

Thank you for your morning updates. They’re very informative and are always the first thing I read when I wake up. Keep up the good work.<\/p>\n

– Alex C.<\/strong><\/p>\n<\/blockquote>\n

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

There\u2019s not much energy left here…<\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-19495","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19495","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=19495"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19495\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=19495"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=19495"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=19495"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=19495"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=19495"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=19495"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=19495"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}