Tuesday, January 31st. - Stock Trends, Charts, and Commentary (*** If you see last week's Tuesday Update: Click Here)
Last Tuesday, we questioned if there was bad news just around the corner ...
As we pointed out last week, the VIX was in a descending wedge pattern.
We discussed it because it is a great pattern with a historical failure rate of only 10% which means it has an accuracy level of 90%.
So today, we are doing an update and showing the chart in two different formats ... as a bar chart, and as a line chart.
The first chart below is a bar chart. It shows that the VIX has remained inside its falling wedge since last November. Some may want to argue the point for last Wednesday and Thursday when the bar was outside of the falling wedge's support line.
However ... the closes for both days reflected a rise back up during those days with the final readings inside the falling wedge ... which brings us to today's second chart ....
In this second chart, we show the VIX as a line chart. Daily line charts only show the ending value for the day as seen below. We left the trend lines exactly where they were on the bar chart, and let the line chart values fall where the actually were.
So, what do you see? From the line chart, it is clear that the VIX maintained its journey within the descending wedge. So, nothing really changed since last week ... we are approaching the breakout window area where the probability for a breakout will increase as we get closer to February 8th.
Bottom line ... market risk levels will now start to increase as we move forward. If the market avoids breaking this pattern to the upside, then it will avoid a unpleasant drop. At this moment, it is still in a high risk, danger condition. (FYI: This chart is one of three VIX charts that are updated daily in Section 4 of our Standard subscriber site.)
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