On Friday the markets broke down.
However, given how negative the news was that day, it is quite telling that the collapse was relatively muted.
The S&P 500 did break initial support (first blue line) but managed to hold secondary support (second blue line). Given that Dr. Fauci of the NIH suggested a national “stay at home” order on Friday, you’d expect a bigger breakdown here.
The other positive development concerns the Volatility Index or VIX.
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Typically, the VIX rallies when stocks breakdown… which is why it’s odd that the VIX FELL on Friday despite stocks dropping.
What’s even more strange is the VIX actually peaked March 19th and has been in a downtrend ever since. The VIX is a much more complicated investment instrument than the stock market. Is the VIX telling us that the bottom is in?
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Chief Market Strategist
Phoenix Capital Research