Don’t Chase This Rally

Despite the volatility, traders should resist the urge to chase stocks higher… [Jeff Clark's Market Minute]( Don’t Chase This Rally By Jeff Clark, editor, Market Minute Get ready for another spike in volatility… soon. The Volatility Index (VIX) is commonly referred to as Wall Street’s fear index. When the VIX is low, investors are complacent and relatively fearless. When the VIX is high, investors are scared to death and are willing to pay huge premiums to purchase put options – which provide protection for falling stock prices. Two weeks ago, the Volatility Index was trading near 16, a relatively low reading. Investors were calm, enjoying the comfort of the one-way market we saw this year up to that point. But, as long-time readers of Market Minute know, periods of low volatility are always followed by periods of high volatility, and vice versa. The VIX had been so low for so long it was well-overdue for a spike higher. And, last week, we got that spike. Recommended Link [The Biggest Financial Event of 2024? (Why 31 Billionaires Are Moving Their Stocks, Right Now)]( [image]( Should you buy, sell, or hold your stock? To find the answer, let’s look at the actions of the world’s wealthiest investors… Right now, the world’s wealthiest investors are preparing for what could become ‘the biggest financial event’ of 2024. [31 billionaires (including: Warren Buffett, Jeff Bezos, and Elon Musk, and more) are MOVING their stocks as we speak…]( To discover where they’re moving their money… Why… And how you can profit alongside them… [Click here to find out.]( -- Some folks blame it on the yen carry trade blowing up. Some folks say weak economic data showed the Fed was losing control of the economy. Some folks say increased tension in the Middle East was the culprit. No matter the reason, investors got spooked. The VIX spiked higher – hitting as high as 65. And, stocks sold off. Of course, this week so far is a different story. Stocks have been rallying. Investors seem happy again. And the VIX is back down to 16. What bothers me, though, is we had seven months where the VIX was low. It seems unlikely we can balance that out with just a few days of a high VIX. We don’t necessarily need to see several months of rising fear in the stock market. But a few weeks of it seems more appropriate than just a few days. The 15-minute chart of the Volatility Index suggests we could see another spike in fear happen at any moment. Take a look… [(Click here to expand image)]( This chart shows a bullish falling wedge pattern with positive divergence on the MACD and RSI momentum indicators. The VIX is approaching the apex of the wedge. So, a breakout – one way or the other – is going to happen soon. Since the momentum indicators have been diverging from the action in the VIX – meaning they’ve been rallying while the VIX has been falling – the odds favor the VIX will break out to the upside of this pattern. And a rising VIX usually goes along with a falling stock market. Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. Traders should resist the urge to chase stocks higher into this week’s rally. There’s a good chance we’ll have a better opportunity to buy stocks at lower prices in the days ahead. Best regards and good trading, [Signature] Jeff Clark Editor, Market Minute [Jeff Clark's Market Minute]( Jeff Clark Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.jeffclarktrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Jeff Clark Trader welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-752-0820, Mon–Fri, 9am–7pm ET, or email us [here](mailto:contactus@jeffclarktrader.com). © 2024 Omnia Research, LLC. All rights reserved. Any reproduction, copying, or redistribution of our content, in whole or in part, is prohibited without written permission from Omnia Research, LLC. [Privacy Policy]( | [Terms of Use](