The VIX Is Telling Us Everything Has Changed For The Stock Market – Mike Swanson (12/10/2018)

The S&P 500 now has major support in the 2580-2600 zone.  Over this weekend I read a lot of commentary from people talking about that level being possibly getting broken this week.  A Reuter’s article even talked about a “death cross event.”

However, I’m not really concerned about a big stock market drop this week.  I figure if the S&P 500 were to go to that level or even through we’d see another bounce.  It’s mainly the time of year – a lot of people stop trading the markets from now till New Years (BTW this is the slowest time for travel for the year too so if you want to take a cheap vacation this is the time to do it).  Plus you have a Federal Reserve meeting next week that many people are going to buy into with the thought that the Fed will make a dovish announcement even if they raise rates.

What I’m more concerned about is NEXT YEAR.  My fear is that if the market does hold up as I expect here that the masses will just become totally complacent.  That’s why yesterday I did a video telling people to prepare for a bear market.  This is a video I didn’t just post on my website, but sent personally to people I know that live in my area.  You can watch it here:

http://wallstreetwindow.com/2018/12/it-is-time-to-prepare-for-even-bigger-stock-market-declines-in-2019-mike-swanson-12-09-2018/

There are two main reasons people remain complacent.  First there was a stock market drop back in February that was quick and sudden that got a lot of attention in the media, but the market came back.  So many people just think oh it’s just happening again.  What’s funny is that the popular stocks that so many own like NVDA and AAPL just continue lower and lower so aren’t coming back for people, but they don’t seem to mind their losses.

The second reason is what happened in 2017.  We saw record low stock market volatility in which the DOW went up or down more than a percent in a day for the fewest amount of times in a year since 1917.  That led to the VIX trading below $10.00 for the lowest amount of time in its history.  Now, of course, the VIX is above 20 and seems to be establishing a higher range now with 15 likely major support and 25 resistance for now.  The market trading with such low volatility for so long programmed people’s minds to think stock market risks were abolished.

What is amazing is that historically corrections even in bull markets end in a panic washout typified by fear and a VIX that goes above at least 30 and we haven’t seen that happen yet despite the stock market drops.  The one day wonder rallies have simply kept people hopeful and complacent willing to ride things out for now.

So on one hand a bounce this week would be good for people and I hope it happens, but I worry that it will just make most people even more complacent and unwilling to take the time to think about their money or plan ahead.  All the signs are there that we are tipping into a bear market, but the masses are too lazy to stop and look at them.  Some do plan ahead and I am focusing on those that do.

Yesterday I decided to release an entire game plan for you to navigate this situation with me in 2019.  I called it The Bear Market Power Pack.  It’s not about selling everything you own and going to complete cash as there are things that are going to go up to become new market leaders as the big cap fads continue to lag.  Grab it by going here:

http://wallstreetwindow.com/bear-market-power-pack/

-Mike




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