Yesterday geomagnetic storm was a moderate G1 class, however the "panic buying" mode we saw today on the market is consistent with increasing emotional participation and in these situations fear can return just as quickly. Risk is not "off" for me....note in the chart below how the daily range is already increasing while the VIX is forming an hammer and stocks are running in long term resistance on a weekly chart up against a 5 year bearish trend-line from the 2007 top. In this early part of 2012 the stock market and risky assets in general are climbing the proverbial wall of worry but that should not make you think that they are immune from reversal of fortunes. Volatility could return any moment and the nature of the upcoming price reaction will tell us more about what to expect next, it may result in a moderate correction foreshadowing additional recovery later or it may provide us with an early warning signal for later.
The geomagnetic storm was weak but an uptick in volatility should be expected since emotions are running high and the daily range is already increasing.....
VIX candlestick tentatively forming an hammer re-gaining its BB bands
SPX on a weekly resistance (the last one...)
Wednesday post FOMC update
