SPY And VIX: Kick, Kick, Boom! Buckle Up Bears
Updated
Please see my previous post from earlier today regarding the three blowoff tops. Top of the market in February, top of the bear market rally in June, and very quite possibly today.
I want to follow that post up with an observation about gaps. It's a tale of four gaps in particular, two on the SPY, two on the VIX.
When the SPY first gapped down in February, the VIX gapped up. Those two gaps have neither been filled nor have they been entered. These correspond with the onset of the bear market we are now in.
At the top of the bear market rally, which ended in June, the SPY gapped down again, and as one might expect, the VIX gapped up. Interestingly, both of the second gaps have been partially filled, but not completely filled.
These gaps are the "kicks" that begin the next phases in the unfolding bear market.
I hate to make a prediction, but considering that today's price action looked and felt so much like a third, albeit smaller, blowoff top, I will not be surprised if we now have a third gap in the SPY and the VIX on our hands.
We may be entering the next phase of the bear market now. And if so, buckle up bears. I know it's been painful having to endure these counter rallies, but they are getting smaller and smaller, first lasting months, then weeks, now days. I think the bulls have run out of road.
I want to follow that post up with an observation about gaps. It's a tale of four gaps in particular, two on the SPY, two on the VIX.
When the SPY first gapped down in February, the VIX gapped up. Those two gaps have neither been filled nor have they been entered. These correspond with the onset of the bear market we are now in.
At the top of the bear market rally, which ended in June, the SPY gapped down again, and as one might expect, the VIX gapped up. Interestingly, both of the second gaps have been partially filled, but not completely filled.
These gaps are the "kicks" that begin the next phases in the unfolding bear market.
I hate to make a prediction, but considering that today's price action looked and felt so much like a third, albeit smaller, blowoff top, I will not be surprised if we now have a third gap in the SPY and the VIX on our hands.
We may be entering the next phase of the bear market now. And if so, buckle up bears. I know it's been painful having to endure these counter rallies, but they are getting smaller and smaller, first lasting months, then weeks, now days. I think the bulls have run out of road.
Comment
To be explicit about the relationship between the blowoff tops and the gaps, each of the two sets of gaps we have so far came after blow off tops. If today was a third blowoff top, on a smaller scale, then we may now expect another gap.
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