VIX vs SOX?
When the VIX falls the SOX will rise but the VIX is still rising.
finance.yahoo.com
stockcharts.com[h,a]daclyyay[pb50,200!d20,2][vc60][iUb14!Uk14!La12,26,9]&pref=G
stockcharts.com[h,a]daclyyay[pb50,200!d20,2][vc60][iUb14!Uk14!La12,26,9]&pref=G
Okay I will admit that I thought the SOX could rise even with a falling VIX. Apparently it could but not for long. Now however as the SOX approaches oversold status the VIX is rising towards it's upper levels instead of still falling. The reason in my opinion is that volatility rises in a falling market. Eventually buyers step in and support a more orderly market leading to rising stock prices.
Even if I am wrong about tomorrow being an up day how much more volatility does the market have to see before sanity in trading returns?
More from Briefing.com: General Commentary
The markets continue to lack positive catalysts of any immediacy. Wednesday morning, the ISM Services Index (Institute for Supply Management) edged down to 57.3% in March from 58.7% in February. If that doesn't sound very exciting it's because it isn't. The slight decline came off a very strong February reading and was more or less in line with consensus expectations. The net result was another session in which traders had little incentive to stake out new positions. After the close, Dell Computer (DELL) reaffirmed its first quarter earnings projection and also guided revenues slightly higher. The late session reaction was favorable though not overwhelmingly so.
From a technical perspective, the very near-term picture continues to deteriorate. The Nasdaq failed to hold notable support at 1800 and also finished the session towards its worst levels of the day. It's also worth noting that both the CBOE Volatility Index (VIX) and the Nasdaq Volatility Index (VXN) cleared their 20-day exponential moving averages on Wednesday. These indices are inversely correlated with the equity markets and serve as a measure of market uncertainty (more typically referred to as fear). Their respective breaks above their 20-day exponential moving averages indicates they should have room to head higher -- the implication being that the equity markets also have room to head lower.
At current levels, the Nasdaq is solidly under its major moving averages and has also failed to hold the lower end of its 10 and 20-day Bollinger bands. To the downside, look for initial Nasdaq support at chart congestion around 1779/1782 followed by an additional floor at 1769. If those two areas fail to hold, look for subsequent support at 1745/1751. If the index should manage a move higher, watch for notable resistance at 1800 followed by an additional ceiling in the area of 1818/1822. Note that this technical assessment is centered on a relatively short time frame. We continue to be bullish on the markets' intermediate-term outlook as both economic and corporate data points show slow but steady improvement.
On Thursday, there isn't much on the docket in terms of economic reports. This week's headline number is the March Employment Report which is set for release Friday morning. Economists are looking for non-farm payrolls to increase by 50,000 and project the March unemployment rate at 5.6%. Aside from the employment report, traders should continue to expect the unexpected. Put another way, look for earnings pre-announcements and any further developments on the political front to disproportionately impact the near-term market direction.
Michael Ashbaugh-- Please feel free to direct comments to mashbaugh@briefing.com
Genesis Microchip (GNSS) 23.96 -0.84: Prudential believes that DisplaySearch data published late yesterday represents incremental negative news for GNSS shares. Said report confirms recently collected datapoints on pricing pressures developing as a result of an increasingly difficult competitive landscape. Firm reiterated its Hold rating on stock.
LSI Logic (LSI) 16.00 -0.67: Shares of LSI traded lower today on a number of semi calls, most notably Merrill Lynch's more cautious outlook on group. Despite subdued tone of morning, Soundview was out with an upbeat note on co: firm believes LSI should meet their ests (LSI reports Q3 4/24) that call for revs of $415 mln, a 2.3% seq increase. Firm added that LSI should continue to see seq. improvement in both revenues and margins in the June qtr. Soundview would be buyers of shares with the stock having under-performed compared to overall semiconductor index.
RtS Return to Sanity |
