September 3, 2018

Volatility Report September 4, 2018

Continued Weakness Offshore Leading the US and Canada

 

The ETF of offshore market EFA is following the Chinese market with a leading diagonal triangle, a bearish chart formation.

Just like the Shanghai index came off its high making three new low pivots followed by a bounce that retraced nearly 38%. The Chinese market went into a waterfall decline, leading MarketMap to consider the same type of action by the EFA, a portfolio of 21 the largest international markets not including US or Canada.

The CBOE provides expected volatility data for the EFA. In the chart-window to the left I have applied the %BB-Oscillator to it to give a sense of the markets current outlook. What is clear is mini panic low in February with %BB-V at 1.05 did not hold, like the previous three overbought readings of its implied volatility. %BB- Oscillator is moving higher suggesting that the market is expecting risk, i.e., a sell-off.

Technical Event Matrix for the L-T supports an expansion of the monthly range, that suggests a high to low range of 10% or better in September and/or October.

click on charts to enlarge
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