Sunday, October 11, 2015

VIX Volatilty Daily Chart Battle at the 200-Day MA

The VIX 200 day MA cross is a critical short term market signal. The 200 day MA is at 16.63. VIX is at 17.08 above signaling bearish markets. If price falls under 16.63 the VIX will signal bullish markets ahead. Note the Thursday candlestick poked down through but could not close below. The red circle in late June early July corresponds to the move in the SPX from 2125 down to 2040, an 85-handle loss. The VIX crosses above the 200 in mid-August as the SPX peaks at 2100 (it then fell to 1870). If you would have immediately, without hesitation, heeded the negative signal when the VIX shot above the 200 day MA in mid-August you would have avoided the waterfall crash or at least a major portion. So keep your eyes on VIX 16.63 at tomorrow' s opening bell since it will immediately tell you market direction.

A second level to monitor is VIX 17.85 (red bar) which is called out by the Keybot the Quant algorithm. With price at 17.08 under the 17.85 bull-bear line in the sand, this creates bullishness in markets.

In summary blending the two indications, the market bears need to keep VIX above 16.63 to stop the upside rally. The bears then need VIX above 17.85 to create actual selling pressure in the stock market. The bulls simply need to push VIX under 16.63 and they will be popping champagne corks singing "Happy days are here again" as t he stock market rallies higher. 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 Tuesday, 10/13/15, at 1 PM EST: The VIX closes under the 200-day MA yesterday (10/12/15) for the first time since mid-August almost two months ago. The bulls cheer, however, in Tuesday trading right now, the VIX is 16.84 climbing back above the 200-day. Keep watching this drama since it will tell you the stock market direction going forward.

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