Topping Process Appears to Come to a Halt (A Weekly Period Analysis)

We are still looking to identify the official start of Primary wave 3 down, but in this historic period for the stock market and economy we have to see the market top first.

Just in the last 3 trading days, the weekly negative price change in the S&P 500 index has increased 53! after being up 8% in the last month.

Why is this different?

Signs of larger decreases ahead in prices appear to be baked in via the volatility “fear index”

Volatility Persistence & Price Changes

A Bigger Volatility Perspective

Volatility on an absolute basis is off less than 50% from just before stocks bottomed on March 23 when volatility on a relative basis dropped 75%! in just three days!

There have also been two significant spikes in volatility and up 44% from one point to the next in a little over a month, since May 13.

Overall, the trend direction and behavior in volatility measured by the S&P 500 CBOE VIX fear index has certainly changed since Primary wave 2 started topping on April 29 and since the March 23 market bottom.

And, in less than a week there has not been a major shift in the volatility trend persistence but the weekly change in the stock price trend has changed dramatically to the downside.

Obviously, we still don’t know if the market has topped

But, the S&P 500 weekly price changes (measured on a daily basis) in addition to trade volume, and volatility persistence we’ll keep an eye on.

We’ll especially be on the lookout for volatility clustering

What is volatility clustering?

To read a well cited paper on volatility clustering, launch:

https://quantitativefiduciary.com/wp-content/uploads/2020/06/Volatility-Clustering-in-Financial-Markets-Empirical-Facts-and-Agent-Based-Models.pdf

To look at the numbers and calculations supporting the charts,

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