COMPLACENCY, VIX & MATA INDICATOR WERE SCREAMING "RISK REVERSAL!"

MATASII'S Proprietary MATA Indicator (Bottom Panel) has been warning that a major VIX Reversal was imminent since late April.

We have posted our concerns on the degree of investor complacency continuously since as it is is often the precursor warning.  Our most recent post was last Friday May 3rd -FED HAS INSTILLED AN UNPRECEDENTED LEVEL OF MARKET COMPLACENCY.

We have additionally been publishing other similar views with charts as well as our recent LONGWave video on "ENDING DIAGONALS EVERYWHERE":

NORTHERNTRADER.COM

MATASII.com published yesterday how Sven Heinrick at NorthernTrader.com was also signaling a move in the VIX:

I couldn't agree more with Svan Henrich when he writes:

Yes China trade concerns are the trigger, but as I always say: Technicals paint a picture of things to come and when things line up markets will find a trigger to confirm the technical picture.

The Ending Termination Diagonals across multiple Indexes have recently been strongly sending a signal that the markets were about to correct!

Besides breaking through the Ending Diagonal's Lower Trend Line Boundary, the VIX gives a CLEAR & DECISIVE confirmation (NOTE the spike through the VIX's Ending Diagonal Pattern below).

 

ELLIOT WAVE INTERNATIONAL

Elliot Wave International published on Monday May 6th just prior to the explosion higher in the VIX:

The current low level of volatility is similar to what we saw at the stock market highs of January and August-October of last year. Back in December 2017, days after the CBOE Volatility Index [VIX] hit an all-time low in late November, the Elliott Wave Financial Forecast reminded readers, "the most placid periods of stock market activity are invariably followed by episodes of extreme volatility."

  • The chart shows the volatility spike that followed as the S&P 500 moved 11.8% in just 10 days in January and February.
  • In late September, after a 27-day streak of low volatility, the Short Term Update made the case for "a renewed pick up in market volatility."
  • On October 8, a few trading days after the S&P 500 started a 20% move, STU discussed Large Speculators' heavy bets on the continuation of low volatility

... and concluded, "Large Specs often make their biggest bets near trend reversals, catching them in wrong-way bets at the wrong time."

The bottom graph on the chart shows that Large Specs have an even larger net-short position in VIX futures contracts now. At 41.2% of open interest, Large Specs are more exposed to a rise in volatility than they have been in more than 10 years.

According to an April 24 Bloomberg headline, "It's a 'Golden Age' for Short-Volatility Trades." If history holds, a rise in volatility should occur shortly.

Speculators Bet Big on Continued Low Volatility

Don't say we didn't  warn you!!



[SITE INDEX -- TIPPING POINTS - RISK REVERSAL]

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MATASII RESEARCH ANALYSIS & SYNTHESIS WAS SOURCED FROM:

SOURCE:  05-07-19 -  Sven Henrich via NorthmanTrader.com  - "Shattered!"

SOURCE:  05-07-19 -  Elliott Wave International - "You Can Outsmart the "Smart Money" Crowd"

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