Markets :The charts that rule them all

Posted: August 10, 2016 in Uncategorized

At the moment in a market that does not make sense (in term of PE, profit etc) only two charts reign supreme

Capture Chart

and

Capture VIX

Let me explain. The two charts are US Based. The first (proprietary, sorry) tracks how much liquidity (you can believe or not it is the US FED…but whatever it is ..it is money flowing in the market).

It clearly indicates that there is a massive amount injected in the system and as all the experts in real estate knows the more buyer there in respect of the sellers…the more the market goes higher. You can see also why Brexit did not crash the market…liquidity dipped…but did not go in contraction.

The second is the classic VIX …it goes inverse to the market (the lower the VIX the stronger the rally). Now the VIX it is at a critical barrier of 11.50 (yesterday  closed 11.66) and it never close lower than 10.32 (July 2014).

So it is possible for the VIX to move higher (market risk) before attempting a move to 10.32…but that is why the market is stuck…massive cash inflows and very little volatility (plus is August and half the world is on holiday)

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