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%.
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:
Long term, the S&P 500 still remains in its multi-year uptrend:
Until this upward trend is broken, it will be business as usual.