Tuesday, September 17, 2013

VIX Volatility Daily Chart Upward-Sloping Channel

The 200-day MA at 14.55 is a very important metric for equities. Above and market bears are rejoicing, below the VIX 200-day and market bulls are on easy street. Price is 14.38, under, so the bulls are happy. The VIX is getting squeezed by the lower blue trend line below and the 200-day above. Today or tomorrow a big decision is made. Bulls want the VIX to fail down through the lower trend line and also to lose the 50-day MA at 14.14. This would signal SPX 1720's on the way. Bears need to push above the 200-day to signal market selling ahead. A very strong market pull back is on tap if the VIX moves above the 20-day MA at 15.38.

Keybot the Quant, Keystone's trading algo, identifies VIX 14.65 as the bull-bear line in the sand for today. This is very near the critical 200-day MA at 14.55 so use this 14.55-14.65 range as the bull-bear decider. Market bulls win if VIX stays sub 14.55. Bears win above 14.65. The upward-sloping blue channel is in play and over the coming days we see if price bounces off the lower rail to head higher again. Indicators are not tipping their hand although stochastics are oversold and require a bounce in the VIX. Markets may try to idle in front of the Fed tomorrow, but the winner will be determined by the VIX 14.55-14.65 gauntlet. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 7:51 AM EST on 9/18/13: VIX closes the day at 14.53. The 200-day MA is 14.54. The drama continues into Fed day.

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