VIX Volatility Daily Chart

Stocks are rallying after President Trump touts happy talk with the US-China trade negotiations. S&P futures are up +25 with the VIX down to 17.85 about 3-1/2 hours before the opening bell for the regular US Monday trading session. As the stock market rallies, simply watch the 200-day MA at 17.07. If the VIX drops below 17.07, the rally is real and has further legs higher for a few days. If the VIX remains above 17.07, the rally will quickly fade and stocks will roll back over to the downside.

The Keybot the Quant algorithm is on the long side and tracking VIX 14.85 as the bull-bear line in the sand. If stocks rally and the VIX drops below 17.07, the bulls will be happy and enthusiastic. If the VIX then drops below 14.85, more new highs are on the way for equities and the SPX will be headed above 3K again. If markets are rallying for several days but are unable to push the VIX below 14.85, then the stock market will roll over again to the downside and then you can watch the 200 again. Easy-peasy. 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 8:00 AM EST: S&P +32. VIX 17.51. The stock market bulls are singing, "Happy Days Are Here Again." However, as mentioned above, the bulls will need another 44 cents lower in VIX to prove that they actually have the beans to sustain the up move. Bulls got nothing unless the VIX goes sub 17.07. Semiconductors are bigtime important this week and greatly impacting stock market direction. NVDA is up +3% in the pre-market adding to the +7.3% gain on Friday. SMH pops +2.5%. XSD and SOX would be expected to pop. The chips are creating market buoyancy. Watch them closely.

Note Added 8:31 PM EST: After the dust cleared today, the S&P 500 pops 35 big points, +1.3%, to 2924 and the VIX drops to 16.88 below the critical 200-day MA at the 17.04-17.07 level. Keep watching it for a couple days to see if it holds, or not. The bulls are partying but the trading volume was pathetic.