Wednesday, October 28, 2015

Complacency In the Markets As the FOMC Meeting Occurs

Click on Chart to Enlarge

There are a number of shorter term notable bearish divergences occurring over the last couple weeks as stocks have continued to advance.  Also, there are some intermediate term sentiment extremes showing up in the put/call option data.

Today the FOMC released minutes and as occurred at the Sept 17th meeting, the VIX is at a relative low, contacting the lower longer term bollinger band on the chart above.  This indicates complacency in the options market relative to the recent range.  This type of signal occurs frequently near inflection points, in this case possibly with a short to intermediate term top in stocks.

There are several other indications of loss of momentum in stocks here.  I will run some scans over the next couple days to look at possible profitable opportunities in the options and stocks.


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