As Warren Buffet likes to say. I last wrote about the "Fear Index" or the VIX (volatility) back in May this year when FTSE was over 6800 and the VIX was close to its lows around 10. Now we have come back by around 10% and people are getting fearful as the VIX spikes up towards 30, seems like it might be a good time to start looking for some bargains, although clearly there could be more volatility in the short term to take the VIX even higher and this could potentially be the start of a more nasty and long lasting bear market.
This is especially so as the timing indicator that I updated you on recently, said sell at the end of last month and this seems to have been confirmed by the FTSE falling further this month. In addition the FTSE's 50 and 200 day moving averages have also produced a death cross as the 50 day has cut down through a falling 200 day also suggesting a bear trend may be underway (see FTSE Chart below the VIX one) and that caution should be the order of the day.
Looking at the longer term chart of FTSE it looks as though there could be some support coming in between around 5900 and 6100 and as 6000 is a nice round number this sometimes bizarrely also helps. So if we get more weakness down to those kind of levels it might be worth looking to open positions for a bounce from there. But be aware that the chartist at Money Week in this article is calling for this to potentially be a bigger correction down to the 5200 area in the medium term so as I always say you pay your money and take your choice and probably still worth being careful out there.
Finally, you can go to the always entertaining / controversial Market Oracle for his view on the US market and it technical outlook in which he tries to answer the question is the bull market over? In the meantime I'm off to hunt for some bargains.