Friday, May 5, 2017
VIX Volatility and SPX S&P 500 Monthly Charts; VIX at 10-Year Lows Reflecting Complacency in Markets
The VIX drops to 9.90 this week reflecting a complete lack of fear that the stock market can ever go down. Low volatility indicates rampant complacency. The green circles show the uber highs in stocks when volatility is uber low; the booze party rages on into the wee hours (when you sell the market). The red circles show the sadness and depression in stock prices when volatility spikes higher; there is blood in the streets and traders are jumping from windows (when you buy). What are you doing?
The Keybot the Quant algorithm identifies VIX 12.00 as the key bull-bear line in the sand. VIX is at 10.46 so the bulls are winning. If stocks selloff but VIX remains under 12, the bears got nothing and stocks will rally. If stocks sell off and the VIX moves above 12, there is lots more market selling on tap.
You can also watch the important 200-day MA now at 12.94. The stock market will be collapsing in earnest if VIX moves above 12.94. Market bulls can recover after a selling event if the VIX remains under 12.94 and begins dropping again to 12 and lower. There is no hope for bulls if the VIX moves above 12.94 since the selling will be extensive and ugly (until the VIX spikes to a high identifying a tradeable bottom like the red circles above). 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 11:55 AM EST: The VIX is at 10.15 with a LOD at 9.99, a 9-handle printing again! HOD is 10.52. Bears do not have any hope with volatility so low.
Note Added Tuesday Morning, 5/9/17: The VIX drops to 9.67 at a 24-year low not seen since 1993. The fearlessness and complacency is off the charts. Traders are drinking Fed wine and Trump champagne each day, drunk as skunks, buying stocks with reckless abandon and total disregard for price. The joyous stock market party continues. Traders high-five each other proclaiming that stocks will never go down ever again. Television pundits shout, "buy, buy, buy!"