A Major Bullish Sign for the S&P 500?

As uncertain as the market has been recently, it might be hard to consider the broad market as actually being bullish. However, we are now more than a month away from the low established on the S&P 500 on March 23rd, and after today’s solid gain we now have another bullish sign to consider.

The S&P 500 made a higher high today. In fact, all of the major broad market indexes formed a higher high. This means that today’s index value has exceeded the last established high pivot. But more importantly, this means that bullish sentiment is now stronger than it has been in quite some time.

Another index we monitor is the $VIX, or the CBOE Volatility Index. This index is also called the “Fear Index”, as it represents the inherent fear in the market. This index prints high values when fear is high, and low values when fear is low. As you may have guessed, it usually goes down when the broad market goes up, and vice versa.

The VIX fell today, continuing its downward trend which started in late March. What’s significant about today’s drop is that it is testing levels not seen since very early March. Now let’s put this perspective though – a value of 31.23 is still a high level for the VIX. But the steady downward trend and the fact that is now visiting levels from when the market had basically started selling off is another signal that bullish sentiment seems to be growing at a steady pace.

Remember that this is an incredibly news-driven market, and even earnings reports are being dwarfed by breaking news on the pandemic. So even though we have this bullish sign, trade with caution as we work our way through these troubled times.

Jeff Drake
True Edge Trading