With the kind of week we have just been through, it is certainly a relief to see a bit of “calm” coming back into the markets to close out this wild week. Drawing too many conclusions from the price action is probably not too wise given the fact that there were huge money flows flipping into and out of various sectors as traders were trying to avoid not only getting steamrolled, but in many cases, apparently from what I have seen in the price action of some areas, desperately trying to minimize what no doubt were some enormous losses.
At least the Complacency Index, as I prefer to call the VIX, nudged down somewhat from what was a 22 month high!
The Gold Volatility Index also moved lower today. It hit its highest level this year but compared to the VIX, still looks rather tame by comparison.
The Dollar, in spite of all the wild swings, violent price action and outright chaos that seemed to mark the currency markets this week essentially ended the week going no where! It remains in a consolidation mode working between 87 on the topside and 85 on the bottom. The market has certainly relieved its overbought status on the technical indicators so this range trade is actually a pretty good thing as far as I am concerned.
This post was published at Trader Dan Norcini on October 17, 2014.
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