The VIX drops below the critical bull-bear lie in the sand at 19.09 (red line), identified by Keybot the Quant algorithm, on Friday. This places the bulls in the driver's seat. Putting aside the Keybot algo, the VIX 200-day MA is a key signal line for bull versus bear markets. It is obvious the 200 is key; look at the price action on the chart.
Bulls win below the 200-day MA and bears win above the 200-day MA. The battle for the 200-day MA may be key for the week ahead.
If the VIX moves back above 19.09 heading higher, the stock market will fall apart to the downside.
If the VIX remains between 16.65 and 19.09, the stock market will chop sideways with a slight upward bias.
If the VIX drops below 16.65, the stock market catapults higher. The bulls will cheer and throw confetti knowing that the relief rally is legitimate, verified and has further upside legs (as volatility drops). The VIX begins trading at 3 AM EST Monday morning so it tells you the expected direction of the stock market before the regular session opens. 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.
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