The following (green highlights) is an excerpt from our Monday August 31st Keys To This Week report that focuses on the US stock market.
Separate Keys To This Week reports are also available for US market sectors, US interest rates & Treasuries, and the US Dollar and Commodities.
Report: Keys To this Week
Topic: The US Stock Market
Date: Monday August 31st 2015
Key #4 of 10, Volatility: CBOE Volatility Index (VIX). TURNING NEAR TERM BULLISH? Chart 5 below shows that the VIX spiked above 44.00 last week, a level that had previously closely coincided with S&P 500 bottoms in 2010 and 2011.
What the chart doesn’t show, however, is that the bottoms in the S&P 500 that these extreme readings preceded came 5 weeks later and 7% lower in 2010, and 8 weeks later and 4% lower in 2011, than the initial index lows while the VIX was breaching 44.00.
In short, this metric suggests that the US broad market is probably within a month or so of another similarly important bottom, but warns that we could still see lower lows first.
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Note: Our Correction Protection Model (CPM) moved to Neutral (out of the market) as of August 13th.