Don't Ignore This Chart!

The $VIX Thrust Isn't Pixie Dust!

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Over the weekend, I was very surprised to see how many industry groups had stalled last week as we attempted to go through to new highs. Some lodged failed breakouts, while others reversed before breaking out. A good example was the SMH (semi's ETF).

On Tuesday morning, the $VIX broke out above the 10-week moving average again. This time, though, the PPO momentum was already above zero. This is an important clue, as the PPO momentum above zero on the weekly chart highlights some rough times to be invested over the last two years.

The above chart is a weekly chart, so we need to see the chart end at this level, not just get through there mid-week. If you had a chance to read my ChartWatchers Newsletter on the weekend, I mentioned the market was setting up for another pullback after a rocky environment since May. Read it here: A Rough Week Is Behind Us, But What Is Ahead?

All that to say, turnaround Tuesday is bringing in some rough water. Keep watching to see if does break down. My work suggests that this is an important inflection point.

Good trading,
Greg Schnell, CMT, MFTA
Senior Technical Analyst, StockCharts.com
Author, Stock Charts For Dummies


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Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA). Learn More
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