VIX Volatility Weekly Chart; VIX Prints a Record-Setting 10-Handle

About 90 minutes ago, the VIX collapses through 11 printing a 10-handle dropping down to 10.68 (blue dot). Wow! The VIX has not seen these lows since July 2014 over 2-1/2 years ago. The complacency and lack of fear in markets is off the charts. No one expects the stock market to ever sell off again. Aunt Nellie just took her entire life savings and bought dividend stocks like the guy on television suggested. She told her lady friends at the card party that she will now be set for life and is happy since she never has to worry again.

In August 2014, only a couple weeks after the low July 2014 print, the SPX dropped from 1995 to 1902 a -5% drop. Note, however, that the low 10-handle prints back then were in place for a month or so.

Back in 2014 note how the VIX was below the 20 MA below the 50 MA below the 200 MA. A mean reversion higher was needed and the spike higher in the VIX sent the stock market lower (blue box). A similar fractal would be expected now. The market euphoria and joy is excessive. Each tweet by President Trump results in more stock market gains. Traders are singing, "Happy Days Are Here Again."

A short trade against the stock indexes can be brought on by scaling in over the next month. Perhaps short a little bit this week, then more next week, then again in two weeks and then again in three weeks to build the short position. By then, there will likely be stock market weakness occurring with the VIX spiking higher. 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.