Charting the S&P 500: Dangerous Complacency at the Wrong Time
Too much bullishness when seasonal weakness is here is not a good combination.
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Get ready for September, it promises to be one heckuva ride. Bulls are confident, and why shouldn’t they be? The S&P 500 is only a fraction away from all-time highs, earnings have been stellar for a second straight quarter and there inflation is not rising much. Seems to be a perfect storm for investors, yet one thing is missing: FEAR.
We look at the volatility index, the VIX, and see high complacency. This reliable indicator tells us how bullish or bearish sentiment truly is, and with the lowest level of the year tagged last week in the 14% range there is no mistaking the lack of fear. Remember, when the VIX is rising it means fear is rising, but when the indicator is coming down or just low the bulls feel there is nothing to fear about a drop in the markets.
September is here, and that is one of the worst-performing months of the year. The setup for a pullback is in place; of course many things can happen to change that forecast, but that is why we play the game.
Indicators have not changed much, candles remain blue and momentum is strong. Money flow ticked a bit lower and volume trends are weak, typical for this time of year.
