Want to Know Where the Market is Headed? Watch the VIX
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 (NASDAQ: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 (NYSE: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.