The Red Line is the S&P 500 and the black line is the fear index, which is nothing
more than a measure of investors flocking into the safety of Fixed Government
Securities.
When we see the flocking into government securities as equity prices are in a potential free fall, the fear index will move to a level showing the outright bearishness of market participants.
The fear index currently tells us that we had a climax bottom on August 16th.
This also confirms the outlook for a final re-test which we are nearing the end of right now.
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