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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
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Tuesday, April 09, 2013

SPX, NDX & RUT vs. Volatility Indices

The following 3 Daily ratio charts show that:

  • the SPX is outperforming the VIX, but the ratio is at a major resistance level...the Momentum indicator has just turned positive above the Zero level
  • the NDX is struggling to outperform the VXN, and the ratio is at a downtrend resistance and well below a major resistance level...the Momentum indicator has turned up and is just below the Zero level
  • the RUT is also struggling to outperform the RVX, and the ratio is well below a downtrend resistance and below two major resistance levels...the Momentum indicator has turned up and is just below the Zero level

I'd conclude from this that it will be important for the Momentum indicator on all three ratios to penetrate and hold above the Zero level as a confirmation of a shift in sentiment towards an expanding appetite for risk by market participants...otherwise, a drop and hold below Zero would indicate that the rally has no sustainability at this time for either the 'defensive' or the 'riskier' stocks and sectors.

The following is a Year-to-date percentage comparison chart of the Dow 30, S&P 500, Nasdaq 100, and Russell 2000 Indices. So far this year, the INDU leads in percentage gained, followed by the SPX, RUT, and NDX. The RUT was the leader until the latter part of March...one to watch for either continued weakness, or strengthening, along with the NDX

The markets are favouring the large-cap 'defensive' stocks at these extended levels, as the SPX faces its 13-year triple top potential cannibalization scenario that I described in this recent post

Keep an eye on the above-mentioned ratio charts for further clues on risk appetite or risk aversion, as the SPX, NDX and RUT each struggle to regain control and dominance over volatility.