VIX Weekly and Daily Charts Oversold Falling Wedges Positive Divergence

The VIX is at six-year lows going back to just before the October 2007 market top. This is fitting since the Dow Industrials is now printing new all-time highs overtaking the 2007 top. The VIX verifies the complacency showing in the CPC put/call. Despite any analysts or traders waxing faux worry, they are staying firmly long and are not worried about any market pull back occurring. Many traders believe the pull back will be shallow so they have a complete fearlessness and will not even think about paring back longs unless a couple percent or more drop occurs.  The equity markets climb higher and the VIX and CPC show that the trader's feet are up on the desk, the trading account is on automatic pilot, and the wine is flowing like water.

The 20-day MA just moved above the 50-day MA (bullish for VIX bearish for markets) which is odd considering the VIX keeps dropping.  Volatility is like a beach ball underwater which may set up some dramatic market action ahead. VIX oversold conditions, falling wedges and negative divergence say a launch pad is in place. We watched this same set up about three weeks ago which created the big launch from the 12's to the 19's. That volatility rocket ship quickly fell back to earth, however, as the dip buyers and strong bulls ran in to buy the 50 handle pull-back in the SPX in February. Thus, the equity markets are printing new highs again, and the VIX is at new lows. The VIX may need a day or two to satisfy the falling ROC and MACD on the daily chart but other than those minor items, the VIX is expected to launch higher at any time which will correspond to the broad indexes selling off. 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.