{"id":22341,"date":"2024-12-06T07:30:38","date_gmt":"2024-12-06T12:30:38","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=22341"},"modified":"2024-12-06T07:30:38","modified_gmt":"2024-12-06T12:30:38","slug":"a-funny-thing-happened-on-wednesday-afternoon","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/a-funny-thing-happened-on-wednesday-afternoon\/","title":{"rendered":"A Funny Thing Happened on Wednesday Afternoon"},"content":{"rendered":"

The Volatility Index (VIX) just sent a warning to short-term traders.<\/p>\n

Over the past two weeks, the S&P 500 has been cruising to one new high after another. The index has closed higher for 11 of the last 12 trading days.<\/p>\n

Meanwhile, the VIX has been falling.<\/p>\n

That’s not a surprise. Indeed, that’s what is supposed to happen. Stocks go up while volatility falls – thereby confirming the rally in stocks.<\/p>\n

But, a funny thing happened on Wednesday afternoon…<\/p>\n

The Volatility Index Rallied<\/h2>\n

At 1:45pm ET, just as Fed Chairman Jerome Powell took the stage at the New York Times DealBook conference, the S&P 500 was trading at 6065 – up 15 points for the day. The VIX was at 13.15 – down 1% on the session.<\/p>\n

Once it became obvious the Fed Chairman was not going to say anything hawkish about the direction of interest rates, traders started buying stocks. The S&P 500 gained another 22 points during the final two hours of the session.<\/p>\n

The index closed at its highest point – ever.<\/p>\n

Oddly though, the Volatility Index rallied in the final two hours as well. The VIX reversed the day’s losses, pressed into positive territory, and finished the day at 13.45 – up 1.13%.<\/p>\n

Of course, we don’t want to read too much into the action of just one indicator during a two-hour window. But, when the VIX rallies along with stock prices, it is often a warning sign that the rally will soon reverse.<\/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

It’s also concerning that VIX call options are trading for about 10x the price of the equivalent put options. We’ve seen how this condition usually leads to a short-term rally in the VIX.<\/p>\n

And, a rising VIX usually goes along with a falling stock market.<\/p>\n

None of this means that the stock market can’t press higher in the weeks to come, or that the widely anticipated “Santa Claus rally” won’t happen this year.<\/p>\n

Wednesday’s action in the VIX, though, does suggest the stock market is headed for some short-term weakness. And, the Santa Claus rally will likely start from a lower level.<\/p>\n

Traders should brace for at least a short-term pullback.<\/p>\n

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

\"Signature\"<\/p>\n

Jeff Clark
\nEditor, Market Minute<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The Volatility Index just sent a warning to short-term traders.<\/p>\n","protected":false},"author":61,"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-22341","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/22341","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\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=22341"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/22341\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=22341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=22341"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=22341"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=22341"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=22341"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=22341"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=22341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}