Stocks Still Look Bullish, but Volatility Flags Are Flashing

TopdownCharts
09-01

$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $Cboe Volatility Index(VIX)$

Learnings and conclusions from this week’s charts:

1. Sentiment is still majority consensus bullish.

2. Stock correlations have dropped to record lows.

3. Volatility (VIX) looks low vs seasonals and single-stock metrics.

4. Semis are still stuck in the mud (peaked, and looking weak).

5. Software is looking stronger (software vs hardware trade reversing?).

Overall, the market mood remains bullish and there are some bullish rotation trades underway.

But the question is when does this consensus bullishness become complacency?

There are a few flags of a potential volatility flare-up on the horizon, so it will pay to keep an open mind and an eye on the charts...

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