📈 State of the Market

These metrics tell a story.

Stocks Continue to Fall

Yesterday we saw a continuation of heavy selling, with the Nasdaq dropping almost 4% and the S&P 500 down over 2.5%.

If you’re not comfortable shorting stocks, your best bet is to simply get out of the way right now until we see signs of a bottom forming.

I want to show a couple metrics I’m keeping an eye on that is telling me what may happen in the market going forward.

Short Term Panic is Nowhere to be Seen

Looking at the chart below, we have VIX/VXX, which essentially gives you a read on the short-term volatility index, and below it is the VIX, which is a reading on longer-term volatility.

What we would ideally see here is the VIX/VXX leading the VIX, signaling that in the short-term, we are seeing extreme panic, however that is not what we’re seeing.

In fact, we’re seeing the opposite.

I’d like to see short-term panic set in, as that is typically what leads to the start of a bottom forming.

Exhaustive Selling on the NASDAQ

One positive sign that I do see is the volume spike below.

You can see that this is the single largest daily selling volume that we have seen in the past year.

Spikes in volume can lead to exhaustive moves, where all of the sellers get out of the market and we can begin to rebuild from there.

We’re seeing stocks like TSLA drop >40% in a very short timeframe. It’s beginning to get excessive and to a point where buyers may step in.

Market Outlook

We’re not out of the woods yet - and we have contradicting signs on what is next for the market.

Again, it’s best to protect capital until we find a bottom if you do not want to short the market and put risk on.

There are other signs of what’s to come that I walk through in this video: