The Stock Market Is Down, Volatility Is Up As Forecasted

Created by the Chicago Board Options Exchange (CBOE), The Volatility Index, or VIX, is a measure of uncertainty in the stock market, and is calculated from the implied volatility of the S&P 500 options, while the VXO measures volatility in the S&P 100. It is also known by other names like “Fear Gauge” or “Fear Index.” Investors, research analysts and portfolio managers look to VIX values as a way to measure market risk, fear and stress before they take investment decisions.

Source: Charles Chapman, Bear Or Bull

On October 10th, I Know First issued a bullish forecasts for ^VXO and ^VIX with signals of 34.78 for ^VXO, and 30.27 for ^VIX, with high predictability indicator of 0.21 and 0.22 respectively. The full World Indices Package includes a daily forecast for a total of 20 indices with bullish and bearish signals. The top performers of the 14 day forecast were ^VXO at 75.5% and ^VIX at 58.2%.

The forecasted success pointed to the recent struggles of the market before it had occurred.

Yahoo Finance

Volatile

Stocks experienced more sharp falls on Friday, producing another volatile session on Wall Street.

The Dow Jones Industrial Average closed 296.24 points lower at 24,688.31 after dropping 539 points at its lows of the day. The Nasdaq Composite dropped 2.1 percent to 7,167.21. At its lows, Nasdaq had declined more than 3 percent. The S&P 500 fell 1.7 percent to 2,658.69, briefly entering into correction. Trading dropped over 10% below the record high that it reached in September. The average stock market correction results in a 13% drop and lasts for four months if it does not turn into a full-on bear market.

Among the driving forces for the market’s sharp drop on Friday were disappointing earnings from key tech companies that overshadowed strong economic data. Amazon went down 7.8% after releasing their quarterly results on Thursday. Alphabet shares, saw a 5.6% drop before closing 1.8 percent lower.

Yahoo Finance

Fear Gauge

These lows were enough to quiet the reported growth of the United States economy, which grew at a 3.5% rate, which exceeded the estimate. The government also said its personal consumption expenditures (PCE) index, a key measure of inflation, increased by 1.6 percent last quarter.

The suffering stocks have also been a result of fear of inflation, as well as rising interest rates. Being that the PCE index is the Federal Reserve’s preferred inflation gauge, these indications could cause the central bank to reconsider its plan to continually increase the overnight rate.

These losses come in addition to sharp drop seen throughout the month. With the Dow and S&P 500 both down 6.7 percent and 8.8 percent, for the month of October. The Nasdaq saw losses of 10.9 percent. The Dow is currently on pace for its biggest one-month decline since May 2010, and the S&P 500 is tracking for its biggest monthly loss since February 2009.

Current I Know First subscribers received this bullish & bearish forecast on October 10th, 2018.

To subscribe today click here.

Algorithmic traders utilize these daily forecasts by the I Know First market prediction system as a tool to enhance portfolio performance, verify their own analysis and act on market opportunities faster.

How to interpret this diagram

Please note-for trading decisions use the most recent forecast.