US Stocks measured in aggregate by the Wilshire 5000 index are now within 3.5% of reclaiming the February 14th high. Despite the bounce from the March 23 low, the wave 2 pattern in stocks which topped at the end of April, has yet to complete itself.
Since wave 1 down in stocks we have yet to see the same level in volume as stocks have slowly recovered. A notable high occurred at the beginning of the wave 2 top and the selloff volume increase the day the CDC reported the largest single day of new US infections on June 10th. The same day the VIX increased 48%.
Yesterday we saw the VIX drop 4.75% as the narrative flipped with positive vaccine news.
As we complete wave 2, a negative narrative accompanied by a spike in the VIX on heavy selling will be the impetus for the start of wave 3 down. A notable bankruptcy could set it off.