Expect a more volatile market for second half of the year, says Katie Stockton

What’s your Wexworth of the day? You know, well, the Wexworth of the day is volatility and it may not be relevant for today in particular. But in general, I do think that we can expect a more volatile market for the second part of this year. And we say that because volatility tends to move in cycles, we look at the CBOE Volatility Index or VIX to that end. And you’ll notice that over time typically will be either in a low volatility regime or a high volatility regime. And we have of course been in a very low volatility regime and seem to be showing some signs that we’re moving out of that. Now that’s not necessarily bearish for the S&P 500 to which the VIX is inversely correlated, but it does suggest that we can be expecting more corrective phases for the latter part of the year and we are expecting a correction to resume here fairly soon. So you’re expecting a correction to resume. That’s very interesting. So yesterday our Jim Cramer Mad Money, he talked a bit about some of the volatility that you’re talking about. I want to get your take on what he had to say about the sell off that we just saw. You look at the survey, today’s action, Dow gaining 107 points, SMB jumping 1.03%, NASDAQ advancing 1.19%. You know we’ve now moved on to an aftermath of a pretty vicious sell off and any decline from here might be an occasion to bye, bye, bye. In other words maybe maybe the worst is behind us. Forget the Fed for a second. Here’s what we have. We have benign earnings reports forbid, but the most important take away, Stop waiting for correction to give you better buying opportunities. We just had one, for heaven’s sake. So Katie, back over to you agree with Kramer’s take that the worst is probably behind us. Well, I mean, there’s a chance of course that April’s pullback was all we needed to refresh the uptrend. But we have indications from a technical perspective that the market has a little bit more work to do on the downside, meaning that sentiment, which was overly bullish ahead of April’s pullback, still hasn’t gotten to the point where it tends to yield great buying opportunities. We like to see that more fearful reading and things like the Fear and Greed Index and also in the VIX as well. So we don’t feel like sentiment was washed out enough in April to suggest that we have our final load to that corrective phase. Also we have some weak seasonal influences. But more importantly there’s been a loss of intermediate term upside momentum the likes of which we haven’t really seen since the last major corrective phase which was last fall. We can liken the current in our indicators to last September. You know I want to talk about momentum with you. We’re going to look at the charts a bit. I know that’s your area of expertise. We’re certainly expecting if the markets continue to move higher, the Magnificent 7 will take a part in it. You’re looking at 2 mag, 7 stocks. Apple, of course, has an event later today. And also Tesla, you’re saying the technical show that they’re on an upward trend. I got to be honest, I see it with Tesla. I don’t quite see it with Apple. We’re going to show the audience the chart just in a second. Let’s start with Apple. What upward trend are you seeing that that shows a clear breakout to the upside. I definitely need to clarify that, that by no means are these in upward trends except over perhaps a very long term time frame for Apple. But we do have oversold upturns. So to kind of specify it as an oversold upturn for both Apple and Tesla, it’s something that we wrote about last week on CNBC Pro and both stocks had some support discovery and then of course minor gaps up in response to news. So those relief rallies in the most beleaguered area of the mega cap complex should continue here in the near term. At the same time, we’ve seen a loss of upside momentum behind the rest of them. One last question, you also cited an out performance of utilities that started in April. What is that signal in your mind? Well, it is more defensive as you can imagine. We tend to see the more interest rate sensitive sectors of the market outperform when the equity market overall is going lower or when fears are running high. So I think it’s a reflection of that, but what it’s helping do is the utilities now look more compelling from a long term technical perspective. So that relative performance improvement for utilities has actually improved their charts also from a long term absolute perspective, meaning that long term momentum shift seems to be meaningful for utilities. It doesn’t mean they’ll be the long term source of outperformance. In fact, after the corrective phase matures, whenever that is, we think it’ll go right back to technology as a source of upside leadership. But even still, utilities can participate.