Wednesday, September 11, 2013

VIX Weekly and Daily Charts

The broad indexes are at an important juncture right now, likely far more important than any trader realizes. The VIX daily chart with 200-day MA is a fave signal to watch. The April market sell off was short-lived, the VIX above the 200 signaled trouble, but the drop back under said the coast was clear for a rally again.  Then the 5/22/13 market top occurred, as the VIX punched up thru the 200 again. The May-June selloff was more extensive but the all clear was given again when the BOE and BOJ created the global market upside orgy on July 4th Independence Day. The VIX is above the 200 over the last three weeks--until yesterday, and the failure occurred in the last minute of trading.

Volatility is the most important market parameter today, bar none. Very simply, the broad indexes continue higher to test the critical SPX 1685 and 1691 resistance levels, and perhaps onward to 1700+, if the VIX stays under 14.57-14.58. The bears will growl if the VIX moves above 14.57-14.58. Thus, the VIX will provide the answer as trading begins today.

On the weekly, the fractal from the August 2011 waterfall crash is in play. When the 20 MA crossed above the 50 MA the fate of the markets was sealed. The 20 MA is teasing the 50 MA right now. The drop in the VIX since last week is similar to the move in July 2011. The waterfall crash was less than two weeks away. The 200-day MA is 14.57, 20-week MA is 14.57 and 50-week MA is 14.78. The critical importance of this 14.57-14.78 support/resistance level cannot be understated. The fate of the markets is determined by VIX 14.57-14.78. The market bulls win sub 14.57. Market bears win with the VIX above 14.78. Pay attention to the VIX today since it provides the answer moving forward. 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.

1 comment:

  1. We are trading:
    To buy 1 Vertical Spread means:
        1: Buy 1 VXX OPT SEP 27 '13 16 Call (100)      2: Sell 1 VXX OPT SEP 27 '13 18 Call (100) 

    $25.00 Risk vs. $175 Reward


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