VIX Volatility Daily Chart

The drama continues with volatility determining the direction forward for equities. The 200-day MA is a key bull-bear signal you can constantly monitor for your trading. When the VIX moves above the 200-day (red circles) the bears are in charge and if the VIX is under the 200-day MA (green circles) the bulls are in charge. That green circle on the right is where the bulls stabbed the bears in the gut verifying the current stock market rally (since the VIX remains under the 200-day).

Price is at 13.31 unable to move above the 200-day MA at 13.98 so the bears got nothing. Note however, that both Thursday and Friday price stabbed above the 200-day but the bears cannot keep the VIX above. Keybot the Quant algorithm remains long and the algo is currently tracking VIX 14.21 as a bull-bear line in the sand. As far as Keystone's algorithm is concerned, the bears need VIX 14.21 before they can stop the equity market upside.

So pay attention to the VIX 13.98 and 14.21 key levels. You can use those levels as short entries where you know markets are in trouble above VIX 13.98 so shorts can be brought on or increased, and then scaled into more above VIX 14.21 as markets begin selling off in earnest. The bull rally continues if the VIX stays under 13.98. Use the VIX as a key signal this week that confirms market direction. 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.