Markets are showing increased signs of investor anxiety, warns BofA’s Macneil Curry. The Friday breakout in the VIX Index says that this anxiety will likely persist into next week. Indeed, Curry adds, the VIX has based from its highest levels in over a year suggesting that investors are more susceptible to bad news and defensive behavior than at any time in the past 12 months. Several markets look particularly susceptible to this change in sentiment.
From an equity perspective, the Nikkei stands out. Its breakdown from 5 week Flag support says its medium term downtrend has resumed, targeting last summer’s range lows between 12,400/13,400.
In FX, the Japanese ¥ is particularly well placed to benefit. The bearish weekly reversal in $/¥ and close through 101.40 says it is resuming its medium term downtrend for 99.06 and eventually the 92/94 area. Finally, regardless of the larger outlook for risk assets stay bearish CNH.