Sellers continued their conquest today with pushing stocks below multi-month lows. Volume jumped 11% on the NYSE and more than 18% on the NASDAQ. We are certainly entering in a dangerous market where things can get out of hand real quick. The VIX was up more than 25% today closing with a 19 handle today. Last month we did see the VIX kiss a 20 handle. Price action has been weak except in the larget cap NASDAQ space. An excuse for the market selloff would be the market is coming to grips with the fact the Federal Reserve may hike rates. It is anyone’s guess. At the moment we have a weak market and it certainly looks like it is about to get weaker.
Sentiment data continues to favor people who are out of the market. NAAIM managers continue to have low exposure to equities and after today they will look pretty darn good by staying away from equities. AAII bulls dipped below 30% at 26%. Bears came in at 33%. Once again neutral was where most AAII members indicated where they were. It is not hard to blame them by any stretch. We haven’t gone anywere in awhile and the market for the most part has stayed within a narrow range. It will be interesting to see how this plays out for the rest of the month and into September.
The VIX like yesterday had a strong close indicating there may be more to this move than meets the eye. All of a suddan investors wake up to the risks hitting this market taking the VIX up to a 19 handle. Could this be signalling a stock market crash? Time will tell. What we do know is fear is back into the minds of traders/investors. Given the current market environment a crash is a possibibility, but not likely. We are not in the prediction business as our jobs is simply to manage our process. Leave the guess work to others and lets kick some ass.
We are treading in very dangerous waters. Time to be cautious and adhere to our trading rules.
