VIX:VXV Ratio Waves a Red Flag, Daily TICKscore Readings Making Successively Lower Highs

The S&P posted a modest gain Thursday on the lightest volume session of the
year. TICKscore closed at +5, Cumulative TICK +11,000. Note from the chart of
the raw TICKscore readings that we've seen successively lower highs from this
indicator ever since mid-July. This signals less and less institutional buying
during each of the market's recent rally attempts over the past month. I'd
also note that bullish short and intermediate-term setups triggered recently
are either off the board or will be shortly, and that the VIX:VXV Ratio closed
under the .90 level Thursday. As the CBOE discussed in a paper on the VXV,
when the 90-day Volatility Index is 10% greater than the value of the 30-day
VIX, as is the case currently, the VIX is likely to bounce over the following
month. That implies the stock market's upside potential is likely to be capped
for the time being.

Categories : Archived EOD Commentary, End-of-Day Commentary

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