KUALA LUMPUR, Dec 4 (Bernama) -- Bursa Malaysia rallied to close broadly higher on Wednesday amid strong buying interests mainly in utility and technology stocks, with the benchmark index gaining 0.44 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 7.13 points to 1,614.09 from Tuesday’s close of 1,606.96. The index opened marginally higher at 1,606.97 and moved between 1,606.53 and 1,616.03 throughout the day. Advancers thumped decliners 727 to 381 on the broader market, with 522 counters unchanged, 781 untraded and 10 suspended. Turnover advanced to 3.60 billion units valued at RM3.30 billion versus 3.32 billion units valued at RM3.30 billion on Tuesday.
The CBOE Volatility Index (VIX), known as Wall Street's "fear gauge," and last-hour trading activity have aligned to create a historically bullish environment for the S&P 500 Index (SPX), according to a note by Dean Christians, senior research analyst at SentimenTrader.
Key Indicators
VIX Decline Below 14
- The VIX measures expected 30-day volatility for the S&P 500.
- On Friday, it closed below 14 for the first time since August, after previously spiking above 20 during a brief market pullback.
- Historically, when the VIX drops below 14 after being above 20, the S&P 500 has posted significant gains:
- Median 1-year gain: 14.2%.
- Positive outcomes in 25 of 26 instances, with the sole exception in 2015.
- In the fall of 2023, a similar VIX movement preceded a 10% S&P 500 gain over three months.
Last-Hour Trading Surge
- Traders have been heavily buying in the final hour of trading in 9 of the last 10 sessions.
- Historically, when this pattern occurs with the S&P 500 within 2% of its all-time high, the index rises:
- 90% of the time over six months.
- Recorded 14 consecutive three-month gains since 1995.
Market Context
- Election Effect: Similar signals occurred after Donald Trump’s 2016 election, with stocks rallying into December before resuming an upward trend.
- November Rally:
- The S&P 500 posted a 5.7% gain in November, its best monthly advance in 2024.
- The index has risen nearly 27% this year, closing at a record high on Friday.
Analyst Insight
Christians emphasized the significance of both the VIX drop and last-hour buying as indicators of a "constructive environment" for stocks. He likened the current setup to the post-election rally of 2016, stating that the evidence strongly supports a bullish outlook despite potential short-term fluctuations.
Takeaway for Investors
These signals, combined with the S&P 500's strong performance this year, suggest a favorable medium- to long-term environment for equities. However, investors should remain mindful of typical market volatility during uptrends.
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