Consider three charts this evening as substantial divergences are showing up in the markets.
The high yield market, a barometer for risk appetite has put in a lower high and is losing support now below the 50 day moving average, while the S&P is still reaching new highs. This should be a waving red flag.
This weekly chart of the volatility index (VIX) is at long term support and showing very complacent readings. Further, a coil pattern is apparent that suggests a large potential breakout in volatility may be imminent.
A wedge like weekly pattern in the gold mining ETF GDX suggests a breakout to the upside could occur soon. In the past, gold stocks have often rallied while the overall stock market sold off.
At this point all that is required is a trigger event for these scenarios to play out.
Could it be trouble in the US China trade negotiations?
Or a new Federal Reserve policy?
Or some other event, such as Iran acting up in the Middle East?
Regardless, the environment is quite fragile, so be careful out there.
At this point all that is required is a trigger event for these scenarios to play out.
Could it be trouble in the US China trade negotiations?
Or a new Federal Reserve policy?
Or some other event, such as Iran acting up in the Middle East?
Regardless, the environment is quite fragile, so be careful out there.
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