Loads of Money... Print
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Loads of Money -

 

Keep the stimulus rolling Joe...

Dear Trader and Clickevents reader

We've almost made it to the end of January '21. Market volatility is low, Brexit got 'done', Vaccines are rolling out and Joe's about to get the $ printing presses rolling again - it's stimulus to infinity folks....

No worries now that Orange man bad has skulked away, we must be almost to Nirvana. But is it all just too perfect in stock markets? Could that low volatility be telling us something we don't want to hear?

Commentators had beenwaxing on about how big the stimulus package will be, from $1.2 trillion to more than $2 trillion, according to some.

However, words of caution are now rumbling as we are reminded from Goldman Sachs, it's not yet a done deal.

Historically, the first presidential year often brings recession and tumbling markets so the previous administration can get the blame, and there's plenty of that flying about!

Read on for a reasoned argument from Elliott Wave International and a no cost deal, below....

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Stock Market: Why You Should Prepare for a Jump in Volatility This volatility indicator "has made a series of higher lows" -- and it's not a good sign

By Elliott Wave International

Stock market volatility is like a roller-coaster ride -- extreme ups and downs.

However, unlike thrill-seeking roller-coaster riders who often rise from their seats after the ride with a smile, investors often exit with a frown.

That's because extreme volatility after a stock rally often ends with prices much lower.

Having said that, many investors -- even professionals -- do not anticipate a jump in volatility right now.

Indeed, the San Diego Union-Tribune asked the senior principal of a financial advisory firm on Jan. 15:

Will 2021 be a volatile year for the stock market?

He replied:

NO: If 2020 had not been a volatile stock year -- what with the pandemic, recession, elections, and riots -- then it is reasonable to expect that 2021 should be relatively stable.

Yet, a key stock market indicator is revealing.

Here are insights from the Jan. 15 U.S. Short Term Update, a thrice weekly Elliott Wave International publication which provides near-term forecasts for major U.S. financial markets:

The chart shows the DJIA in the top graph and the CBOE Volatility Index (VIX) in the bottom graph. We've inverted the scale of the VIX so it aligns with stock prices.

This index measures investors' expectations for market volatility for the coming 30 days. Most of the time, the VIX trends and reverses with stocks.

When the behavior changes, it's time to watch both stocks and the VIX closely.The most recent intraday low in the VIX occurred at 19.51 on November 27. Since then, the DJIA has made a series of higher highs while the VIX has made a series of higher lows. This divergence is denoted with a red trend line on the chart.

The Jan. 15 U.S. Short Term Update goes on to describe a "clue" in spotting when volatility might start to spike.

Moreover, subscribers are provided with the Elliott wave labeling of the DJIA, which provides even more precision in ascertaining when to expect a change of character in the market.

Right now, you can read EWI’s U.S. market analysis FREE inside the State of the U.S. Markets FreePass event.

Now through February 3, you’ll see what Elliott waves show next for U.S. stocks, U.S. Treasuries, the U.S. dollar, gold and more

Follow the link to see everything that’s included and join now: State of the U.S. Markets FreePass

Don't miss it...

Kind regards