S&P 500 vs VIX Put/Call Ratio | Jason Goepfert

Volume in VIX puts was more than two times that of calls on Friday.
That's one of the highest turnovers in 15 years.
It has typically spiked at times of extreme anxiety.

Jason Goepfert, November 4, 2024.

 

 Preliminary CBOE Put/Call Volume Ratio on Nov. 4 at 2PM ET 

is officially "pretty far up there".

Tom McClellan, November 4, 2024.

 

 S&P Cycle Analysis - Time and Price Projections | Steve Miller, November 4, 2024.

 

 S&P 500 E-mini Futures (daily bars) | November 4, 2024.

S&P Cycle Analysis - Time and Price Projections Update | Steve Miller

The upcoming week marks the pre-election period, where heightened election anxiety and a significant earnings schedule are expected to drive high volatility. This trend is likely to continue through election day. Historical analysis shows that the September to November timeframe has often been associated with increased risk, frequently leading to substantial market corrections.

 

SPY (weekly bars), the MACD, and the extreme stretch between the 13-week and 89-week 

moving averages, which historically always leads to extended corrections.

 

Stocks have demonstrated remarkable resilience, displaying behavior that can be characterized as extreme. The above weekly chart of the SPY highlights this dynamic, tracking the moving average convergence divergence (MACD) alongside the distance between the 13-week and 89-week moving averages. Currently, the MACD indicates an unusually wide gap between these averages, suggesting a potential correction on the horizon.

 SPY (weekly bars), six-month cycles, three-month cycles.

When such corrections occur, they can be quite severe. Although the market has remained strong, November and December are anticipated to experience downturns due to the current extremes, which could lead to several challenging weeks ahead. Nevertheless, broader analysis suggests that the bull market may extend into 2025 before facing a significant downturn, potentially resulting in years of low or negative returns in the stock market.

 SPY (daily bars) and 21-trading day cycles with projected ideal troughs around 

November 6 (Wed) and December 4 (Wed), with a margin of ±3 trading days.

An examination of the SPY across various timeframes, including weekly and two-hour metrics, reveals a deterioration in the two-hour indicators, often the first sign of an impending correction. Historical examples, such as the market's reaction following the 2016 Trump election, highlight the potential for volatility. On that occasion, the Dow fell nearly 800 points before rebounding. Similar large movements are anticipated in the days leading up to and following this forthcoming election. While signs of a downturn have been expected for weeks, the market continues to set the course, underscoring its ultimate authority.

Reference:
Steve Miller (October 25, 2024) - S&P 500 Cycle Analysis - Time and Price Projections Update (video)

 

 

Hurst Cycles in the S&P 500 — David Hickson, October 9, 2024.

S&P 500 Cycle Analysis - Time and Price Projections | Steve Miller

SPX (monthly bars)

SPY (weekly bars)

SPY (daily bars)

SPX (daily bars): ideal 21 Trading Day cycle trough November 6 (Wed) ± 3 days.

VIX (daily bars)

Looking at weekly, daily, and intraday charts, our proprietary indicators indicate a strong bullish sentiment, with the SPY, and QQQ showing very bullish trends. While corrections are often anticipated, the market conditions do not suggest a need to short at this time. The S&P weekly chart remains strong, showing no signs of a peak yet. Although historical valuations are high, there is currently no indication of an impending downturn.

However, we also need to consider potential downside projections. While the market is currently strong, indicators and cycles suggest that we should be cautious as we approach the election period. We anticipate a pullback of approximately 6-10%, with the potential to reach new highs afterward. While cyclical patterns indicate possible declines in Q3 or Q4, our analysis suggests that major corrections might be more pronounced in November or December.

We are experiencing an elevated VIX during a strong market, likely due to geopolitical tensions and the upcoming elections. Historically, such an elevated VIX during bullish trends raises questions about potential market peaks and whether investors are hedging against upcoming volatility. The cycles suggest that implied volatilities might rise sharply post-election, possibly reaching the mid-30s or higher.

Reference:

Steve Miller (October 19, 2024) - US Stock Market - S&P 500 SPY | Price Projections & Timing | Cycle and Chart Analysis. (video)

S&P 500 Cycle Analysis | Steve Miller

Reference:
Steve Miller (April 26, 2024) - S&P 500 Cycle Analysis. (video)