Historical compare S&P 500 vs. VIX vs. ADX - June 2009

Was trying to find some direction for the market in the coming weeks. I took a look through history to see if I could find a time when the SPX, VIX (volatility), and ADX (trend strength) all had similar values. The best match I could find was the beginning of June 2009. You will have to zoom in on the time frames to get a better view of the data.

I know, I know, this time is different. Anyways, take it for what it's worth (free analysis from some random guy on the internet :)

During the first week of June 2009,

• S&P had a breakout of 9 days with several new highs without pullback.
  
• During that time the VIX held relatively flat and
  
• the ADX sunk to a low of 14.38.
  

During those 9 days I can only imagine how everyone must have thought the bear market was over. The irrational exuberance much have been at an all time high. However, the S&P then went on a 19 trading day decline (the rest of June) erasing much of all the gains made over the previous month. On the upside, after the market shook that off it rallied for something like 2 months without a meaningful pullback.

There are clearly parallels that can be drawn to today. The fact it is almost June I assume is just a coincidence, I doubt it is an omen ;)

• Today we have had about 5 days of new highs with out a significant pull back.
  
• The VIX has been flat for the last several days of new highs and
  
• the ADX has reached a low of 15.4.
  

Obviously, the Fed was not as aggressive back in 2009 and things are different in many ways. Maybe we will rally for 2 months without a pullback, but I doubt it. Pullbacks are a natural part of the market cycle. The question is not if but when and how much. We could easily climb up for a few more weeks before we see a pullback to a level that we see today. Hopefully it will become clearer soon. Be ready to pounce one way or the other. Hoped this helped and happy trading.

评论:

FYI, I am not sure how to factor in the opening up of the economy from coronavirus restrictions. One of the core rationales that is being used for the market's rapid bounce off the bottom was that the market is forwards looking, and the eventual opening was already priced in. However, clearly the markets like the idea of the economy opening up now, which seems to be redundant if it was already priced in. It seems that investors can always find a reason to buy stocks. Where else are you going to put your money? This would lead me to believe that the market is just going to keep going up. Pumping up the different sectors (tech, travel, financial, etc.) until the each hit their limits. Tech stocks seem to have already done that and travel is massively on the rise.

Also, I am not sure how to factor in escalating tensions in Hong Kong and deteriorating U.S.-China relations. Last time that happened, the market dropped substantially (Dec 2018).