I wanted to ignore all the noise and just look at the numbers so I went through monthly charts since the start of 2011 to view which months were down since we just closed down 3.1% in August.
By the way I started at 2011 because in my opinion that is where went from a market bounce to a market uptrend, just my opinion.
As you can see the SP500 has seen 12 red months since the start of 2011. Of those 12 red months, the average % loss was -2.6% . August just closed down -3.1% which to me was average.
Then I wanted to see what the VIX did in the same period. During the down months in the SPX we saw the VIX rise in price 10 out of 12 months with the average gain of 19%. In August the VIX rose 26% which is slightly above average.
Now the key stat, how did the SPX perform in the following months? I only wanted to focus on the months in which the VIX saw an increase above its 19% average (bolded numbers). So one month later the SPX on average rose 1% and three months later the SPX saw a rise of 4.3% on average.
I believe that there is room on the chart to head lower at first but overall I feel like this is just another average pullback and that the highs of the year are not in. If we add on the 4.3% average return after 3 months hypothetically we would be trading at 1702 at the end of November.
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