VIX Volatility Weekly and Daily Charts Oversold Falling Wedge Positive Divergence

The lower volatility handed the bulls the upside markets on a silver platter. Last time this chart was at the bottom and the positive divergence and oversold conditions, across both the weekly and daily charts, pointed to a launch, which occurred. But The Fed's printing press is strong and the bulls pushed the VIX lower again to create new market highs. The negative divergence for the stochastics (red line) on the daily chart wanted to see the pull back. The other indicators wanted to see higher highs in the VIX, and still do, but the three-day push has beaten the VIX lower nonetheless. Yesterday's candlestick is a doji so perhaps a trend change back to the upside is on tap. There were no gaps to fill below so there was no reason for the VIX to come back down.

Typically, for such an attractive positive divergence set-up, this would set up a much longer term sideways to sideways up for volatility. The red lines on the daily chart show how the indicators wanted to see one more low in the VIX and sure enough that was printed mid-February. The charts say all systems go for VIX upside but the market euphoria and Fed are holding the VIX beach ball underwater. That may prove interesting when the grip slips. The yellow lines show key support at 13.50, which held yesterday, then 13, then 12.80. A bounce is anticipated from here but if the bulls keep beating the VIX perhaps the 13 will mark the near-term bottom in preparation for the move higher again. 

Note on the weekly chart how the pull back was a perfect back kiss of the top rail of the falling wedge pattern. The pink bars highlight the critical 15.55 level that the bears need to launch mayhem. If the VIX stays under 15.55, the bears got nothing. Above 15.55 and markets will noticeably sell off. The VIX charts say up (equity markets down) but the Fed keeps pumping. 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.