Sport Investors League
  • Politics
  • Stocks
  • Investing
  • Business

Sport Investors League

  • Politics
  • Stocks
  • Investing
  • Business
Stocks

The Most Important Chart to Watch Into Year-End 2024

by admin December 7, 2024
December 7, 2024
The Most Important Chart to Watch Into Year-End 2024

“The market goes up the escalator and down the elevator.” This is a quote that one of my mentors, Ralph Acampora, shared with me when I visited him years ago at his farm in Minnesota. This market truism is based on the fact that volatility tends to remain low in bull market phases, and volatility tends to spike higher during bear phases.

Why does this tend to happen? Well, when everything is going well, and investors are optimistic, they tend to slowly accumulate positions on the way up. But when investors get nervous, do they calmly and rationally begin entering sell orders? They do not. Panic ensues, selling begets further selling, and what’s known as a “waterfall decline” quickly emerges on the charts.

A number of my recent podcast interviews have included discussions of the VIX and why volatility may be the most important metric to follow. My fellow StockCharts contributor Tom Bowley (a fan of the Carolina Panthers, a team with an equally painful record to my Cleveland Browns) told me it was at the could help you provide the gift of more mindful investing techniques! For those on your list that are not big on the financial markets but also super important to you, check out the “Personal Development” section at the bottom!


Comparing Volatility Between Stocks and Bonds

While many investors are familiar with the VIX to track volatility in the equity markets, far fewer are aware of the ICE MOVE index which tracks volatility for bonds. Perhaps the bond markets are signaling uncertainty that is not yet reflected in the movement of equities?

We can see a generally positive correlation between these two data series, although October saw the MOVE surging much higher than the VIX. Post-election, however, both the MOVE and the VIX have dropped in a very similar fashion. For now, the two indexes reflect a low-volatility environment for their respective asset classes. This chart has a place of honor on my Market Misbehavior LIVE ChartList because I have often found the fixed income markets to serve as a leading indicator for stocks, especially when it comes to anticipating risk-off scenarios.

High Yield Spreads Remain Quite Narrow

We can also look at the high yield or “junk” bond market to determine how that particular area of the fixed income space is performing relative to stocks. I have found that high yield spreads, measuring the gap between yields on junk bonds versus risk-free Treasury bonds, often move in tandem with the VIX.

I have plotted the ICE BofA High Yield Index Option Adjusted Spread in the top panel using an inverted scale, followed by the VIX also on an inverted scale. The inverted scales are used here because of the traditional inverse relationship between these two data series and the S&P 500 index, shown at the bottom.

Note that high yield spreads are literally at their lowest levels in years, indicating that bond investors are perceiving a low-risk environment. So bond investors are saying low risk, equity investors are saying low risk, and that means this bull market is in great shape… for now.

While all three of these charts confirm the current low volatility uptrend phase for stocks, these charts will also likely provide us with clear signals when that low volatility bull phase is over. Using these charts as a guide, we can measure when the S&P 500 is perhaps ready to “take the elevator down” in a new correction phase!

RR#6,

Dave

P.S. Ready to upgrade your investment process? Check out my free behavioral investing course!


David Keller, CMT

President and Chief Strategist

Sierra Alpha Research LLC


Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

0
FacebookTwitterGoogle +Pinterest
previous post
National Police Association endorses Trump pick for FBI director
next post
Double Top on Industrials (XLI)

Related Posts

The 4 Best Tech Stocks to Watch Now!

June 28, 2024

Three Stocks to Watch: Utilities, Banks, Airlines

April 5, 2025

This S&P 500 Rally is Defying the Experts...

September 24, 2024

Big Rally Ahead Should Yield All-Time High on...

June 7, 2025

Be Careful With These Topping Candles

February 3, 2025

Only 3 Of The 7 Mag Stocks Are...

October 21, 2024

Will the S&P 500 Break 5000 by September?

July 30, 2024

CrowdStrike: Did On-Balance Volume See the “Largest IT...

July 21, 2024

Don’t Buy Robinhood Stock… Until You See This...

May 9, 2025

Gold Top? Focus on These Potential Price Objectives

June 18, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent

    • Offense vs. Defense: How Geopolitical Tensions Shape Market Trends

      June 25, 2025
    • How to Use Fibonacci Retracements to Spot Key Levels

      June 25, 2025
    • Shifting Tides in the Stock Market: A New Era for Bulls?

      June 25, 2025
    • Experts gauge success of ‘bunker buster’ bombs dropped by US on Iran nuclear sites

      June 25, 2025
    • ‘I’m just a silly girl’: AOC fires back after Trump calls her ‘stupid’

      June 25, 2025

    Categories

    • Business (995)
    • Investing (2,462)
    • Politics (3,057)
    • Stocks (1,094)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: sportinvestorsleague.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 sportinvestorsleague.com | All Rights Reserved