Checking the Oxygen Tank

Where's my Sherpa??

Let’s get the volatility stuff out of the way first. The VIX Mix was unchanged yesterday, holding steady at a bullish 69%. Also holding steady was the bullish component count at 11. VIX-VOLI dropped back into the red as the only bearish indicator on the board.

The only thing wrong with a bullish 69% reading is that the VIX Mix is not keeping pace with equity markets making fresh all-time highs once again.

And taking a looking more closely at those all-time highs, it appears that equity indices have climbed to a place where the oxygen tends to run out. This first chart shows the Nasdaq 100 (QQQ), the S&P 500 (SPY) and the Russell 2000 small caps (IWM) using Keltner Channels set to create bands using three ATR (average true range) as the upper and lower limits. Click the image to make it larger. Note that the standard setting would be two ATR. You can see that strong rallies can hug the upper boundary, but the recent move has broken out to the upside. This does not mean we’re in for a crash. Just recognize that a pause would be in order.

Another way to assess this move is to look at how far away we are from a moving average. The lower pane in this next chart of SPY shows distance from a 50-day simple moving average. As you can see, we’ve traveled a long way in a short period of time. Similar to the move coming out of the Tariff Tantrum last year and another sign that the air is getting thin up here.

I’m turning the tables on you today. What artist or song(s) come to mind as we observe a strong rally that may be losing steam and need some fuel/oxygen?? Send me something in the comments!

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