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PREV (the Matrix)
New alignments: Gasoline
On again and off again trade discussions are driving investors crazy. US stocks rally, then decline over the short-term, but longer term, they remain closer to their all-time highs than lows.
Trouble ahead for stocks was suggested by accumulation of the VIX (DI > 60%). This accumulation is fueling today's rally in the VIX. Rather than rehash what we knew yesterday, what do we know today? The public & pro indices clearly shows that the current rally is public driven (see VIX Public/Pro Indices). The VIX's spike from the recent low has been accompanied by public spike and a professional decline. This setup, a bullish divergence within the VIX that favors a bottom in May, suggests that the professional are fading the rally; the public chases VIX strength at the open while professionals spend the remainder of the day selling it.
VIX Public/Pro Indices
Using the Matrix
The value of the Matrix is far more than a study of price. Trends are a function of price, volume (force), volatility, and TIME. The order of their importance is as follows: (1) TIME, (2) volatility, (3) volume & price alignment. Volume and price alignment, a setup that triggers action, favors Grade A & B, early cycle markets under high compression (↓COM). ↓COM suggests extremely low volatility, a quiet trend ready to explode into high compression (↑EXP). Weekly and monthly breakout signals are not finalized until the end of the week and month, respectively. Signals generated before that could be temporary. Keep this in mind when reading alignment.
Suggested Reading: The Cycle of Accumulation and Distribution (CAD), Leverage Oscillator (LTLO), Diffusion Index (DI), Volatility Bandwidth (BW), Compression (COM), Expansion (EXP), Alignment, Upside Alignment, Downside Alignment, Sentiment Model, Intermarket Trends, VIX Model, Economic Activity Composite, Long Term Cycles.
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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.