Published September 14, 2012
The market has been very, very good lately, but are the good times about to end? One indicator to look at is volatility; usually when it’s declining – and it has been for months – the market goes up.
Unfortunately, volatility is now near multi-year lows and due for a bounce. That could indicate the market is due for some rocky times.
It’s not a sure-fire indicator, but certainly something to watch.
One stock we’ve watched repeatedly is Facebook (FB). I had stayed away until a few weeks ago when I thought it might be oversold. That turned out to be the case, and now there’s further evidence the stock may be headed north.
Take a look at the break in the downtrend line. If you were waiting for a sign of strength, now’s the time.
On the flip side, Kraft (KFT) has been booted from the Dow, but technical problems started a few weeks ago when it broke its steady uptrend line. I think it’ll slide further, so if you have it in your portfolio you might want to trim your losses.