Sunday, January 26, 2014

VIX Volatility Weekly Chart

Some fear finally appears in the markets with the elevated volatility. The VIX jumped +46% last week and price pokes above the upper trend line. The real test is the 200-week MA at 19.37. Note how 4 of the market bottoms (green circles) occurred as soon as the 200-week was tapped. Thus, the stage is set for another dramatic test. VIX remains bull-friendly for more than two years. The indicators are ready to call a base now and prefer to see sideways to sideways higher moving forward. Watch the 200-week MA to see if dip-buyers come into the equity markets. If not, and the market selling continues, the VIX will explore the higher resistance levels. A break up through 27 opens the door to far higher VIX numbers representative of a broad market in free fall.

For now, simply use the 200-week MA as a guide to see if the bears got game this time, or, if they fold like a cheap suit, crumbling back from the 200-week MA with the markets in a recovery rally. The chart hints that the bears intend to growl and move above the 200-week MA going 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.

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