Stock Market Rally Showing Cracks While Investor Complacency Grows
-
The stock market is in a "risk on" environment, with new highs for the S&P 500 and Nasdaq 100 indexes. However, a correction could dampen enthusiasm at any time.
-
The volatility index (VIX) has bottomed out in mid-December, indicating low fear and high confidence. This usually precedes corrections.
-
The advance/decline ratio for the technology sector shows negative divergence. Many tech stocks are not participating in the recent rally, indicating weakness.
-
The rally has been driven by a select few mega-cap tech stocks. If one or more of these stocks falter, it could spread negative sentiment.
-
Tesla, which helped drive previous highs, has been steadily falling. Its continued weakness could quell enthusiasm about the market rally continuing.