The VIX 200-day MA is a useful short-term stock market signal. Bears win above the 200 and bulls win below. In November, the VIX pierced the 200 to the upside that is the exact top in the SPX which then retreated about 40 points. When the VIX fell back below the 200 that was the buy signal on 11/20/17 and stocks rally higher.
In late November early December, the VIX again pierces the 200 to the upside marking another top which led to a 40-point intraday drop. As soon as the VIX dropped back below the 200 in early December the bulls began charging higher again.
The VIX pierces the 200 to the upside last Tuesday. A stock market selloff occurs but if you blinked or went to the can you missed it. The VIX remains above the 200 so stocks should sell off until the VIX drops below the 200 to signal the all-clear for another rally. Nope. This tried and true relationship, that is sure as the sun rising each day and then giving way to the moon, is violated. This behavior is rare.
The VIX should have dropped under 10.83 two or three days ago considering the non-stop all-time record highs occurring in stocks.
The VIX is above the 200-day MA for five consecutive days and yet no selloff in stocks. Note the candle for yesterday, Monday, 1/22/18. Price came down to 10.84 tapping on the 200 and then recovering. As this is typed one hour before trading in the Tuesday regular session in the States, the VIX is at 11.04.
Something has to give. Either the VIX has to drop below 10.83 to prove that more upside record highs are guaranteed, or, the VIX will continue higher to 12 and 13 which will spank equities lower finally providing a selloff in the stock market. VIX 10.83 dictates whether the bulls, or bears, win today. 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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