Entry/exit signals for SPY QQQ TQQQ IWM SPX NDX based on VIX.
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Updates 3:05 PM EST - Tuesday 3/23/21
Money Twisty Flows
As the end of the month and end of the quarter approach, there are streams of money flowing in opposite directions.
Fund Rebalancing: In early March, JP Morgan came out with an estimate that balanced mutual funds, defined pension plans, Norwegian oil fund and Japanese government together may sell as much as $316B in equities to rotate into bonds.
Bank of America released a report overnight with a similar conclusion, but a smaller number, about $88B rotating from equities into bonds.
Quant Funds Algo Buying: According to Nomura analyst, the drop in volatility recently is likely to trigger algo buying of equities.
Stimulus Checks Going Into Stocks: The $1400 checks are starting to get distributed into household accounts. Analysts are expecting that a good portion of this money will get invested in the stock market.
Which way will stocks go will depend on which force is the strongest, the selling faction versus the buying faction.
After dropping sharply on Monday and early today, $VIX just rose sharply and $VXN is starting to rise as well. Market breadth (A/D lines) are dropping sharply for NYSE and Nasdaq stocks. Yet US 10-year yield has been steadily dropping since Friday.
IWM sold off hard today. $SPX sold off moderately. $NDX went sideway.
Clearly there are lots of conflicting information. One thing we can be certain of is that this market is not ready to embrace any one direction yet. So as traders, we should be careful of not committing to a direction yet either.
Read the rest of this analysis, and get the latest entry/exit signals for SPY QQQ TQQQ IWM SPX NDX based on VIX here.