In our notes from yesterday, Time to Catch Some Breath and Buy Low Sell High – Markets Reaching Resistance Levels, we suggested the recent move higher had reached delicate levels and a retracement was to be expected. We wrote:
We believe shaving off bounce longs looks attractive here
VIX is down substantially, and given the fact we are about to enjoy earnings season soon, volatility is starting to look like a buy at these levels.
Euro Stoxx 50 is down today in the aftermath of the new Trade War shots. The channel we have been pointing out is still holding and the reversal so far looks rather perfect.
S&P 500 futures are down as well. 2800 is a huge level and so far this looks like another school book reversal. If we continue moving lower, we look to be forming diminishing momentum, since the possible top here (let’s see if that plays out) didn’t reach much higher than the previous top in June.
VIX is up 12-13% from yesterday’s’ lows.
Source: charts by Bloomberg