Richard Russell – After the Calm Comes the Storm
April 25, 2012
With continued volatility in global markets, the Godfather of newsletter writers, Richard Russell, had some very interesting charts and warnings in his latest commentaries. Here is what Russell had to say: “I show the VIX below, often referred to as ‘the fear index.’ The VIX tends to rise as investors’ fears rise regarding coming events in the market. Note the long decline of the VIX during 2010 as investors were increasingly complacent. Then in March the VIX shot up as the stock market crumbled. Again in July the VIX surged to over 47 as the market sank into a vicious bear market. ”
Richard Russell continues:
“Starting in August the VIX headed down again as investors’ nerves settled down. The VIX hit a low in April. But the latest reading is a sudden surge above the 50-day MA. This suggest that investors are getting a bit nervous again, and that some rocky weather may lie ahead. I think hat the dividing line for the VIX is around 25.
If the VIX climbs above 25 I take it as a sign of forthcoming trouble. The latest VIX is around 18.23 — basic complacency, but the complacency has probably dropped as low as it’s going to go. ‘After the calm comes the storm.’