Karpel’s Corner: $VIX breaks down, Market continues higher

Welcome to Karpel’s Corner. This is where I throw out my thoughts on the markets and share some of my favorite strategies. I keep it market-focused, and never miss an opportunity to teach trading strategies and commentate on the latest trends affecting the financial markets. Hope you enjoy today’s post!

This is like a broken record: The large caps ($SPY & $QQQ) bounce after two days of weakness. The Small Caps ($IWM) are lagging, but this is just not enough to put the fear in the market bulls.

Speaking of fear: The volatility ($VIX) just couldn’t hold the pop.

Going forward, I will focus on the small caps, especially if the higher beta index will break resistance at 116 on the $IWM.

I am also watching the strength in the Euro ($XEO), looking for a break above 137, which would cause further weakness in the Dollar ($UUP) and another catalyst for upside continuation.

With earnings and the fact that we are on extremes, I’m going to be very disciplined on deployment of risk capital.

See you next time at the Corner!