VIX Volatility Daily Chart 200 MA Cross

Volatility jumps higher today above 13 but is languishing on each side of this psychological 13 number. As a rule of thumb for the VIX using it as a tool, market carnage is guaranteed with the VIX above its 200-day MA now at 13.60. The market bulls can make a come back and recover if they can keep the VIX under the 200-day MA. Note that eight days ago price ran above the 200-day MA but it was a one-day event. Keystone described the market selling then as a volatility event. No meat and potatoes sectors had rolled over so once fickle volatility dropped markets would recover and that is what happened. Since late last week, however, for this recent three-day market sell off, volatility moves higher but this time with a semiconductor sector that has broken down and a weakening retail sector. Note that the VIX ran higher today to test the 200-day MA printing a HOD at 13.64 but it could not stay above and was spanked lower.

Keybot the Quant remains short with RTH 59.62 and VIX 12.70 the key bull-bear lines in the sand that control market direction currently. Both are bearish, but only by pennies, hence the broad indexes stagger sideways unwilling to commit either way. These two parameters will point the way ahead. RTH is printing at 59.59 only three pennies on the bear side causing market negativity. VIX is 12.99 bearish by 29 cents (remember volatility moves inversely to equities).

The VIX 12.70 line is identified by Keystone's algorithm, Keybot the Quant. So use the 12.70 level and 200-day MA at 13.60 as the two key indicators on this chart. Markets will remain weak and drift lower with the VIX above 12.70 and bears win big above 13.60. Equities will recover and move higher if VIX drops under 12.70. The red lines above encompass the 200-day MA over the last few months, all of this year, so use the 13.6-14.5 range as a key resistance area for VIX. Market trouble occurs above VIX 13.60 and serious trouble, with the SPX dropping into free fall when VIX moves above 14.5. The VIX is printing at 12.95 as this message is typed. The RTH is 59.58. The SPX is down barely three points to 1975.75. 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.

Note Added 1:26 PM: The RTH moves higher to 59.65 above 59.62 so equities will recover today and move higher. VIX is 12.82. A big rally will occur if VIX drops under 12.70. Bears will resume selling pressure if RTH drops under 59.62.

Note Added 1:31 PM: RTH 59.64. VIX 12.80. SPX 1977.56. TRIN is at 1.20 representing a preference for steady-eddy selling today so if the Arms Index had its way it wants to see RTH, the retail sector, weaken again.

Note Added 1:55 PM:  The market price action displays more drama than a Shakespearean play; comedy and tragedy all at the same time. The VIX drops under the 12.68 bull-bear line in the sand (use this number instead of 12.70--Keybot is constantly calculating numbers in real-time) creating a further move higher in the stock market. The bulls recover today meeting the RTH 59.62 and VIX 12.68 goals. Keep watching these levels since the movement above or below these two key levels for these two parameters will tell you which way the market is going.

Note Added 1:58 PM: RTH 59.68. VIX 12.67. SPX 1980.49. TRIN 1.27. The beat goes on. Keystone took profits on the JJG trade exiting the long position. JJG likely has some more near-term juice (days) but is tricky since the weekly chart remains weak. No use turning down a profit and moving on especially after catching the exact bottom.

Note Added 2:06 PM: The VIX back kissed the 12.68 critical level and failed now at 12.61 so the bulls may plan to run further today.

Note Added 10:36 PM: The VIX ends at 12.56 in the bull camp sticking a thumb in the bear's eye. The bears, however, declare victory by pushing RTH back under 59.62 which created the broad market weakness into the closing bell during the last one-half hour of trading. So Tuesday is very simple. Watch VIX 12.69 and RTH 59.62 to determine market direction. Bears will rejoice as equity markets crumble if the VIX moves above 12.69 and above 13. Bulls will toast victory ahead if they push RTH above 59.62. If VIX stays under 12.69, and RTH remains under 59.62, then markets stagger sideways like the town drunk unable to make a decision. The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead, however, the 8 MA is running upwards, and the 34 MA is dropping downwards, so a potential positive 8/34 MA cross may occur placing the bulls back in charge. The 8 MA on the 30-minute is 1978 so the bears must send SPX price under 1978 and lower immediately after the opening bell to stop the 8/34 positive cross from occurring. If the SPX begins the day hanging around 1979-1983, say for the first hour of trading, markets are going to head higher and RTH will likely turn bullish. If the bears push the SPX lower from the get-go, under 1978 and down towards 1967, the long-awaited sustainable market selling event may be at hand with the VIX moving above 12.69. As explained and highlighted in the above chart, the VIX 200-day MA is key. Bears need VIX above the 200-day MA at 13.60 to growl strongly and guarantee sustainable market carnage. If the VIX stays under 13.60, the bears got buptkiss. Dollar/yen is buoyant at 101.88 moving higher so the weaker yen creates lift in the NIKK tonight and will help the bulls tomorrow. Market bears want to see the dollar/yen lower to 101.80, 101.70 and lower. Market bulls want to see the dollar/yen higher above 102. Use the 101.88 as a reference to see who wins overnight.

Note Added 11:04 PM: Scroll back to the RUT chart or type 'RUT' into the search box at the right to bring the chart up and study the 150-day MA slope cyclical indicator that is explained. For any stock or index, the slope of the 150-day MA tells you if the stock is in a cyclical bull, or cyclical bear, pattern. The RUT has enjoyed an upward-sloping 150-day moving average for many long months but in recent days the slope is flattening and may roll over. If the RUT 150-day MA slope rolls over to a negative slope you are witnessing the exact inception of a cyclical bear market that may last months or a year or two. The last four days result in the following 150-day MA prints for RUT; 1153.67, 1153.92, 1154.00 and 1154.09. The differences are 25 cents, 8 cents and 9 cents. Wow! This is intense and very important; one of the most important things you will witness. The 150-day MA slope is only 8 or 9 pennies from slipping negative for the Russell 2000 Small Cap Index. Obviously, by definition, if price continues printing under 1154.09, this will drag the 150-day MA lower to make for happy market bears. If you see the RUT starting to run higher tomorrow and this week, above 1154.09 the fix is in and the bears will get slapped in the face again as markets run to the all-time highs. It is a huge deal if the RUT 150-day MA slope turns negative; it cannot be understated. It would mean that all the bullish prognostications on the market are wrong. Watch it like a hawk.

Note Added 10:04 PM on 7/29/14: VIX regains 12.69 and higher creating market negativity. VIX is 13.28 and the 200-day MA is 13.58. Bears need thirty cents more to move VIX above 13.28 which will unleash market carnage. Bulls can stage a recovery if they prevent VIX 13.58. Note that the RUT 150-day MA is 1154.05. Bingo. Bears pop champagne corks after being kicked in the teeth for months, and years on end. The RUSSELL 2000 SMALL CAP INDEX 150-DAY MA ROLLED OVER TODAY PRINTING A NEGATIVE SLOPE FOR THE FIRST TIME IN OVER TWO YEARS. The CYCLICAL BULL MARKET NOW TURNS INTO A CYCLICAL BEAR MARKET. The expectation is that the small caps will roll over much more going forward and the Nasdaq and broad indexes will follow along lower each index then rolling over with its 150-day MA turning negative in the days, weeks and months ahead. The bulls must reverse this major negative market signal immediately and the only way they can is to drive markets sharply higher starting tomorrow. Bulls need a big rally to save the day and turn the RUT 150-day MA slope positive again.