VIX Index Indicator (Fear Index)

VIX Index is one of the popular index that measure the global stock market's expectation of volatility implied by the S&P 500 and it is also known as "Fear Index". Investors should constantly check the VIX Index as it shows the fear of public investors on the global stock markets.

So, How do we know whether the public investors are panic and fear on the global stock markets? Let's backtesting the past few economic crisis results,

In 2008 (The worst economic disaster since Great Depression of 1929)

VIX Index in 2008

The economical crisis was started around the end of 2007 till 2009. The VIX index above showed how panic the public investors are and compared it with the stock market in 2008. The VIX index has almost reached 100% in such a short period.

S&P 500 in 2008

Usually, when the S&P 500 has fall below the important support lines then we would see a high pitch of VIX index. In other words, global investors are selling off their stocks and start to fear about the future. Or else, the movement of VIX index would be at around 20%.

In 2015 (Latest correction of global stock market)

As we mentioned earlier, if the stock markets went too high without any correction then be prepared for it as it will eventually comes. Please do not mistaken the difference between technical correction and economic crisis.

S&P 500 in 2015

Since after the economic crisis in 2008, the S&P 500 went uptrend for around 220% without any proper deep correction. In August of 2015, the S&P 500 index has finally make a correction for more than 15% in just a period of 6 months.

VIX Index in 2015

Before the stock market collapse, VIX index will always went higher than before because of majority of the investors are fear and uncomfortable with the current markets price. Basically, VIX index (Fear Index) will always be unstable when most of the investors are greed and the global stock index price went up until uncontrollable.

To be advised:
1) Always check the VIX index to see how fear is the global investors at this current stock markets.
2) VIX went higher than normal means that the stock markets are going to have a correction or collapse.

Hope everyone could understand the VIX index. Please drop any comments. Thanks.

The Coming Bear Market?

Recently, the performance of the stock market does not perform well. Does it means that the Bull Market is coming to the end? Bear Market is coming soon? The candlestick pattern indicator is showing a weird signals. Based on the backtesting results,

HSI: Market (2007)

A breakout signal on 29 Oct 2007 with four candlesticks and then a gap drop signal to begin with the bear market. In fact, it was the beginning of a Bear Market,

If compared back to the recent HSI (2017),

Exactly the same candlesticks signals have appeared again. A breakout signal then four candlesticks and a gap drop signal with a similar Volume of transactions.

KLSE (2017)

For Malaysia Bursa, the stock market started to perform poor in June onwards. Recently, there were also a continuously 8 days of dropping in the stock market. In addition, the recent highest point in Sep was even lower than before in June, in which the market proved that the economy might be collapsing. The most critical point is 1753, better hope that the stock won't drop below that level. If not, 1727 (-3.34%) will be the next resistance line.

According to these recent performance, it is quite dangerous. However, nobody will exactly know or inform everyone that the Bear Market has arrived (not until you have almost reach to the bottom). Personally, I think everyone should re-examine your portfolio and try to get rid of useless or underperformance stocks as the market does not really look so healthy.

Technical Analysis - The wave analysis showed that this is the final wave of the Bull Market (5th wave) before the bear market has come. For those safety investors or low risk investors, short term stocks should not be considered as the current market is quite difficult to play.

Be Prepared For The Bear Market to arrive! Have you think of any strategies to prepare for the coming bear market?