VIX Volatility Weekly Chart

Lots of eyes on the VIX these days. And with good reason. The red arrows show the spikes in the fear gauge corresponding to market sell offs. The crash in 2008 was remedied by QE1 at the green circle in March 2009.  That calmed the VIX back down to 15 but in April 2010 the party was over once again and markets sold off.  The markets were saved by QE2 in the summer of 2010 which sent the VIX back down to 15. The market sell off in 2011 was remedied by Operation Twist and the now coordinated global intervention with LTRO 1 and 2.  This central banker money-pump sent the VIX under 15 this year until the May sell off. In the summer, the central banksters come to the rescue again, like propping up a drunk using a lamppost, and Draghi announced his pledge to use all means necessary, then announcing the OMT Bond-Buying plan, then Chairman Bernanke announcing QE3 Infinity and QE4 Infinity and Beyond. The VIX is actually heading higher after the QE4 announcement completely opposite of all prior moves over the last four years. The SPX is now under all these latest quantitative easing pumps from this summer thru now.

The pink boxes illustrate the importance of the 200-week MA now at 23, exactly where price sits.  The VIX will either receive a spank down from the 200-week where the markets will rally and recover, or, will spike up thru the 200-week causing very strong selling in the markets. VIX must decide today and Wednesday. Also watch the 20 and 50-week MA cross (blue squares) since the cross provides a very good read on the markets; a market selloff from late 2008 to early 2009, then rally to early 2010, then selling to Fall 2010, then a market rally into summer 2011, then a sell off until the rally was confirmed in January this year, and that is where the cross sits, the 20-week is under the 50-week MA. Remember a low VIX is complacency and bullish markets, a higher VIX is moving up to fear and panic and markets are selling off. The indicators (green lines) show the positive divergence we have watched all year long, but has been painfully slow to develop into substantial volatilty upside, but price is finally moving higher and the long and strong profile points to higher highs ahead and the VIX punching up thru the 200-week MA, which means that equity markets are likely looking at a weak January ahead. 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.