Last week the chart below reflected investors were becoming pretty confident of late.
The VIX index was nearing levels where the 2010 and 2011 highs took place, which reflected that it was a time to grow cautious on the markets (see post here)
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What has happened since the VIX was reflecting higher investor confidence? The 500 index has declined just under 3% in 3 business days!
I shared with Premium Members a couple of months ago, if you like to watch grass grow or paint dry, you should like the upcoming market action. The patterns at that time, suggested choppy market action should be all too common!
The chart below, published two months ago, suggested choppy markets were to remain in place until the Dollar could break from a large flag pattern, with resistance dating back 10 years. (see post here)
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Since the above charts were created, two months ago, the Dollar has pushed a little higher, testing the top resistance line and the 500 has declined a small margin below the trading range.
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The patterns reflected the market would remain choppy until the Dollar would break from key resistance. Dollar bulls reached lofty levels of late and have backed off a little bit.
Even though sentiment reached 80% of late (too high) a breakout (that is bigger than now), will cause more investors to be happy about the Dollar and hop on board!
