Heat and Humidity Persists - Summer Doldrums Firmly in Place
Heat and humidity - aka the "summer doldrums" - rule the day here in the Northeast. Anything of note about this? Nah. August is just being August.
Will the action in the markets reflect the traditional action that takes place during the summer doldrums? If past history is any idicator, and you're someone who goes with the odds, the answer has to be "Yes!". Then again, you never know.
And so last week, even as we were entering into the summer doldrums, we provided an overall review of what we saw happening in the markets in response to various "warnings" being pushed by the financial media. Our conclusion:
All in all, the pattern has been calm. And maybe the recent warnings were based on these being too calm. The old saying "calm before the storm" comes to mind here. On the other hand, it may just be regular old calm, despite the constant yammering you hear all the time about how "volatile" markets are. They're not always volatile folks. So maybe that's all this is afer all. Either that, or those summer doldrums will indeed emerge and stifle things until Labor Day.
We'll stick with this except for one interesting chart pattern that could be the fly in the ointment. It's a chart of the VIX that includes "Bollinger Bands." These twin bands give us an upper and lower limit. Some professionals use them to try to discern whether an item is slated to head up or down. The VIX or Volatility Index, closed right on its lower Bollinger Band on Friday. What's the significance of that? Well, if today it closes below that lower band, then subsequently turns around and closes above the lower band, you get a broad "sell" signal for stocks. Such a close says that volatility will be increasing, and stock prices decreasing.
Here's the chart for today, around 10:30 AM. You can see that the VIX has actually risen above its lower Bollinger Band. So does that mean no "sell" signal? No. Remember, we're looking for where it sill sit at the close of the markets today before we draw any conclusions. So for those of you getting a bit bored of summer doldrum market activity, now you've got something to peak your interest. Have fun!
Will the action in the markets reflect the traditional action that takes place during the summer doldrums? If past history is any idicator, and you're someone who goes with the odds, the answer has to be "Yes!". Then again, you never know.
And so last week, even as we were entering into the summer doldrums, we provided an overall review of what we saw happening in the markets in response to various "warnings" being pushed by the financial media. Our conclusion:
All in all, the pattern has been calm. And maybe the recent warnings were based on these being too calm. The old saying "calm before the storm" comes to mind here. On the other hand, it may just be regular old calm, despite the constant yammering you hear all the time about how "volatile" markets are. They're not always volatile folks. So maybe that's all this is afer all. Either that, or those summer doldrums will indeed emerge and stifle things until Labor Day.
We'll stick with this except for one interesting chart pattern that could be the fly in the ointment. It's a chart of the VIX that includes "Bollinger Bands." These twin bands give us an upper and lower limit. Some professionals use them to try to discern whether an item is slated to head up or down. The VIX or Volatility Index, closed right on its lower Bollinger Band on Friday. What's the significance of that? Well, if today it closes below that lower band, then subsequently turns around and closes above the lower band, you get a broad "sell" signal for stocks. Such a close says that volatility will be increasing, and stock prices decreasing.
Here's the chart for today, around 10:30 AM. You can see that the VIX has actually risen above its lower Bollinger Band. So does that mean no "sell" signal? No. Remember, we're looking for where it sill sit at the close of the markets today before we draw any conclusions. So for those of you getting a bit bored of summer doldrum market activity, now you've got something to peak your interest. Have fun!
Comments