Tuesday, December 3, 2013

VIX Volatility Daily Chart

Volatility was the big story yesterday that the main stream media missed. VIX is up from 12.2 to 14.2 in 5 days, +16%. The thick red line highlights the 13.94 level, identified by Keystone's trading algo, Keybot the Quant. This is a bull-bear line in the sand and the equity weakness yesterday afternoon began when VIX moved above 13.94. The VIX moves higher with equities moving lower and volatility moves lower as markets move higher. The higher the VIX, the more fear and panic enters markets, while a lower VIX reflects complacency and a rising stock market. Equities should continue lower moving forward as long as the VIX stays above 13.94.

A level and signal anyone can watch is the VIX 200-day MA. Market bulls are drinking wine enjoying bullish markets as long as the VIX is under the 200-day MA. The market bears steal the booze bottle and send markets lower when VIX moves above the 200-day MA. The green circles show the go-signals for market bulls while the red circles show the go-signals for market bears. The HOD yesterday is 14.31 six pennies shy of the 200-day MA at 14.37 so the bears have the champagne in the frige but have not yet popped the corks; they need 14 pennies higher today and then the bear celebration can begin in earnest. The indicators show the positive divergence bottoms and are all now long and strong indicating a desire for higher VIX prints even after any pull back in the VIX would occur. This chart is very friendly for those bearish the markets. Today is a big day. Watch 13.94 and 14.37 for signals on market direction. 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.

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