VIX Volatility Daily Chart

The falling wedge, oversold conditions and positive divergence were used seven days ago to identify the launch pad bottom for the VIX. Volatility rocket launched last week and then on Monday hit the afterburners pushing above 19. Alas, then VIX tumbles two days in a row to close tonight at 14.73.  Looking at the four major indexes today, the SPX and INDU (Dow) led the Nasdaq, COMPQ, (tech) and RUT (small caps) higher, which is not what you want if you are bullish, you want tech and small caps to lead. The Dow and SPX regained their 20-day MA's but the COMPQ and RUT did not. The Dow is making new highs for the week but the SPX is only flat on the week. The Nasdaq is flat on the week as well and the RUT is actually down 0.7% this week so far. This background information is important as you see the VIX did not make it down to the starting number this week (pink line). Can the VIX come down to the 13.5 tomorrow. Sure it can.  Watch to see if the VIX can at least return to where it started the week, or not.

The 50-day MA is 14.70 and where the VIX parked for the evening. Thus, the move up or down from here when the bell rings will provide an immediate read on the broad indexes, down VIX is up markets and up VIX is down markets. The green lines over the last few days show all long and strong profiles except for the negative divergence with the stochastics that has to be credited for causing the VIX pull back. The other indicators want to see a higher high than 19. The 23 is a logical target for the days ahead but this seems unreasonable in light of the wild bullishness today.

The VIX is favoring the sideways range through 13.5-19.0 so if the VIX drops tomorrow, the 13.5-ish level is very important. Projection is for the VIX to continue higher with an eventual test of 23 in the days, or couple-few weeks 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.