Knee Jerk Reaction... Or Something More?

Knee Jerk Reaction… Or Something More?

Yesterday, as news of Malyasia flight MH17 possibly being shot down, combined with the news of escalating offensive maneuvers in Gaza, caused the VIX (aka the fear gauge) to jump a whopping 37%.

vix

After months of very low volatility in the market, is this the beginning of a reversal in trend — or just a knee jerk reaction to recent geopolitical news?

Markets Over Extended?

A Point and Figure chart of the S&P 500 shows the recent run up in stock prices. The markets at this level do look a bit extended and ready to enter a phase of consolidation. However, I think this will be another short term event:

s&p pnf

Long term, the S&P 500 still remains in its multi-year uptrend:

spx weekly

Until this upward trend is broken, it will be business as usual.

Thanks

-John

 

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