VIX Volatility Daily Chart

The 200-day MA on the VIX chart is a key short term market signal; above the 200-day MA is bearish; below bullish. The VIX begins the week at 13.74 well under the 15.37 level keeping the bulls in charge. The major selling events this year were in January which gave way to the February rally (VIX drops under 200-day signaling the all-clear) and in March and late June-early July. When the VIX drops under the 200 the fix is in and bulls win.

Keybot the Quant, Keystone's proprietary trading algo, identifies VIX 13.85 as the most important parameter currently impacting broad stock market direction. On Friday, the VIX ran above 14, the HOD is 14.73, and it looked like time for the bears to growl. The growl turns into a whimper, however, when VIX drops back below the 13.85 level. Thus, markets will remain in happy bull mood if VIX is under 13.85. Market selling will occur if VIX moves above 13.85 but bulls should be able to keep the selling to a short term event if the VIX stays under 15.37. Above 15.37, and the stock market will be dropping like a stone. These levels will remain in play all week long give or take a few pennies either way. 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 Monday evening, 7/27/15: The VIX jumps above both the 13.85 and the critical 200-day MA at 15.38 ushering in market negativity. Tuesday is very important trading to see if the bears can keep the VIX above 15.38, or not.