VIX Volatility Daily Chart; Battle at the 200-Dy MA Continues

The bull-bear battle at the VIX 200-day MA at 17.01 continues with the bulls exalting themselves into the lead yesterday after volatility collapses below the 200. VIX drops so stocks pop. The VIX is currently trading at 16.22 jumping nearly +3% in the early going on Thursday morning 2-1/2 hours before the opening bell for the regular US trading session.

So the bulls have their chests puffed-out with the VIX on their side (below 17) but the bears are trying to spoil the fun. Stock market bulls win over the coming hours and days as long as the VIX remains below the 200. Bears will win in this time frame if the VIX moves above 17.

Keybot the Quant is on the long side these days, dealing with the choppy markets, and tracking VIX 14.99 as the key bull-bear line in the sand; call it 15 to keep it simple. Thus, according to the volatility parameter in the Keybot model, bears are in control in the daily and few-week time frame ahead if the VIX remains above the bull-bear line at 15. The stock market will eventually roll back over to the downside if the VIX remains above 15 and if this happens, the VIX will likely venture higher to test the 200-day again.

If VIX loses the 15 level, the SPX will be happily launching itself towards 3K again. Between 15 and 17, stocks will likely whipsaw and chop sideways. Stocks will fall apart if the VIX moves above 17.

When a critical moving average is broken, a back-kiss is typically in order. Hence, the VIX floats higher as this message is typed. The VIX may make a bounce or die decision in the 16.50-17.00 area. Back tests occur because price wants to make doubly sure that it is heading in the correct direction. If the VIX move lower is a fake-out bull trap, the VIX will quickly move back above 17 slapping the bulls in the face. If the stock market bulls are correct and the S&P 500 is on its way to record highs above 3K again, the VIX will collapse below 15 and the consumption of Fed wine will continue. 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 7:24 AM EST: VIX 16.03. S&P futures -1. Volatility sneaks a little bit higher maintaining a 16-handle after yesterday's close with a 15 handle so futures slip a tiny bit lower.

Note Added Friday Morning, 8/23/19, at 6:37 AM EST: The battle at the 200 continues. The VIX came up for a back kiss yesterday and ran to 17.68 to make for happy bears but then volatility fell on its sword and collapsed back below the 200. The SPX gains 8 points, +1%, to 2924 and the VIX finished at 16.68. Of course the market makers bounced it two pennies at the close so as not to print the infamous 666. So the back test was successful for the stock market bulls with the VIX remaining below 17. In the early going East Coast time, three hours before the opening bell for the regular US Friday session, the VIX is at, wait for it..... wait a bit longer for it ..... 16.66. S&P futures +6. All eyes are on Emperor Powell who speaks at 10 AM EST from Jackson Hole, Wyoming, USA.