VIX Volatility Daily Chart

The rally in chips creates the up move in the stock market in the Thursday session. During the last half-hour of trading in the regular session, the VIX collapsed below the 200-day MA at 17.18. This action triggered algorithms to execute large-block orders and created the big pop higher going into the closing bell.

The stock market trouble started as July ended. The VIX jumped above the 200-day so it was over for equities. The VIX and SPX (broad stock market) move inversely 90% or more of the time. 

The Keybot the Quant algorithm flipped long yesterday due to the strength in semi's which will again tell the story today. S&P futures are down -16 with the VIX popping to 18.27 (red cross) about 5 hours before the Friday morning opening bell for the US regular trading session. Thus, the bull joy at the end of the day yesterday did not last long.

Note that Keybot is tracking VIX 14.56 as the key bull-bear line in the sand. The algorithm is telling you that volatility remains elevated and continues creating market negativity. The VIX 200-day MA is a key technical indicator that simply separates a short-term bull market from a short-term bear.

SOX 1478.25 and VIX 17.18 rule the roost for Friday trading and will dictate stock market direction. The VIX is above 17.18 so the bears are growling.

If the VIX remains above 17.18, and the SOX loses the 1478.25 level, the stock market is in trouble. If the VIX remains above 17.18, but the SOX does not fall below 1478.25, stocks will chop along sideways into the weekend and will have to resolve on Monday morning.

If the VIX drops below 17.18, creating joy, but the SOX loses the 1478.25 level, stocks will chop sideways and have to resolve on Monday. If the VIX drops under 17.18, and the SOX remains bullish, stocks will be marching 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.

Note Added 5:05 AM EST: VIX is trading for a couple hours and sits at 18.16 with S&P futures -14.

Note Added 5:23 AM EST: VIX is at 17.99 with S&P futures -11.

Note Added 5:48 AM EST: VIX is at 18.28 with S&P futures -16.

Note Added 6:41 AM EST: VIX is at 18.46 with S&P futures -19.

Note Added 7:19 AM EST: VIX is at 18.55 with S&P futures -21.

Note Added Sunday, 8/11/19: The SPX drops 19 points on Friday, -0.666%, to 2919. VIX finishes the week at 17.97 above the 200-day MA so the bears are growling.