Sum
VIX again proved why I consider it such an essential supplemental indicator and great all-round market tell. On Thursday, with an ugly open, VIX tagged the Q4P in pre-market and was near the OctP for session. VIX quickly assessed 'no problem' and dropped big from there. Oh yes this was also a tweet in real time. Not to mention VIX has been below all pivots on daily close every day from 8/22 on, the day after the last key pullback low in USA indexes on 8/21.
XIV also doing well, above all pivots from 9/11 and showed no sign of any drop from Q4R1, which cleared on 10/13 and held as support on 10/19.
The only thing we can say here is some VIX divergence off lows, and XIV testing 2HR2 which could look more bearish with a fade back under the level.
Other safe havens are weak. TLT had the 2nd YP rejection of the second half, and back down to a crucial support area of 2HP and D200MA. AGG also under YP as of 10/20, while HYG nicely confirmed risk on by holding Q4P and recovering above all pivots on 10/17.
Lastly, metals are holding pivots but have put in lower highs and to my eyes seem ready to break down.
With TLT lower and metals looking weak the larger theme is interest rates and I will do a special post on these coming up.
Bottom line is - risk on. Usually we see VIX and XIV divergence along with safe haven strength (& HYG weakness) before a big stock index turn. That isn't happening right now. Stock indexes will be even stronger if TLT breaks 2HP and GLD breaks Q4P as the next move.
VIX
W: Weekly close low holding as support the last several bars. However, spike up to near 2HP was quickly rejected.
D: In fact, Q4P on VIX high and slam.
D: 2nd time near tag of lower BB has been bought.
Sum: Risk on with VIX below all pivots since 8/22 on daily close. Some divergence compared to indexes with VIX off the lows.
XIV
W: RSI overbought now, but no BB divergence yet.
W: Slightly above 2HR2, level to watch.
D: Slightly above 2HR2; needs to fade back under or reach Q4R2 for an good UVXY idea.
TLT
W: YP rejection! 2nd time in 2H. 2HP still holding but if that goes, we could see sudden move up in rates.
D: OctP resistance then Q4P rejection last week. Back down near 2HP.
D: 2nd recent test of this crucial 2HP and D200MA area.
TLT: Still above 2HP, below the others; but seems like major breakdown could be next move.
AGG
Below YP for the 2nd time in Q4.
HYG
Good tell last week to not get too bearish was HYG back above all pivots on 10/17.
GLD
W: Above 20MA, but to my eyes looks ready for fast drop lower.
W: Near tag of 2HR1 rejection; 2nd time this quarter.
D: Recovered Q4P then quick move to OctP, just as fast move back down to Q4P test.
GLD sum: 2HR1 rejection and weekly chart looks bearish; but still above Q4P. Good r/r short below that level (which is also likely associated with interest rates going up).
GDX
Still above Q4P and D200MA; if lower then will be at 2HP support again.
SLV
2 tries above 2HP OctP combo and 2 failures. Still holding YP support as of 10/20.
