Increase in Volatility

Increase in Volatility

Posted on May 18, 2011

It appears that fear has been creeping back into the markets. The strongest areas like metals and energy are showing weaknesses. They have both seen an increase in volatility which tends to be a sign of future difficulties. Our Canterbury Volatility Index, has turned Bearish on commodities and some energy sectors. Surprisingly, our volatility index and volatility indicators, on the US major stock markets, are still Bullish. Some of our technical indicators were calling for a short term pullback since last Thursday, May 12th which has occurred. The current pullback is now losing steam. The Dow dropped 170 points at mid day Tuesday and finished down just 69 points. The S&P 500 finished the day basically unchanged. The stock market is moderately over-sold and due for a near term rally.

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