SPY, ETF 2016-2017 Review

It’s always a good idea to look at the VIX before we look at any SP500 related asset. The VIX gages the level of fear, and we can see that this morning the fear level spiked in a near vertical move. Fast spikes I don’t want to see until we get closer to the end of a move, but not so much in the beginning of a move. The VIX just past $14 this morning, but I will be looking for another leg up, if another correction develops.

I have noticed that markets in general can turn close to the 10th or 20th of the month and today the VIX did not disappoint us.

SPY is the ETF version of the SP500, which we can see is not that violent when compared to futures charts. The futures charts are leverage while the SPY is not. The market moved south this morning, which is no worse than a little bee sting when we compare it to any other dips or corrections.

In hindsight, and from the early 2016 low, this market gained about 32%. Today seems to be a bearish day and may be the start of a bigger correction to come. We have gaps in the SPY ETF, and in the long run they will all get filled. Of course new gaps will open up on the trip south, but for now the gaps will be of little concern. 

As soon as the word, “Support” is used, I know that the investors or analysts that use that word, are just looking for another  bull market correction.  They all made that same mistake at the 2000 and 2007 peaks and those dips were much deeper than a simple bull market correction. They were also smaller degree declines than what we are expecting at this time. 

If we think that the 2008 crash was just a, “one of a kind event”  then we are sadly mistaken because we can’t banish boom and bust cycles, when we have governments dedicated to creating boom and bust cycles. I will not talk about a potential short term support level as none of my readers can take advantage of it anyways, besides any forecast I can come up with, I already mentioned with my future updates. 

So far the SP500 is still heading down, but this is very early in any corrective stage, so buckle up, as the road is going to get very bumpy.