VIX Volatility Daily Chart; VIX Moves Above Important 200-Day MA Ushering in Stock Market Negativity

The VIX pops above the important 200-day MA at 15.11 ushering in stock market negativity. At the same time, the Keybot the Quant algorithm remains bullish, however, the VIX fails into the bear camp at 15.20 yesterday sending equities lower. The VIX 15.11-15.20 level is for all the marbles.

Very simply, bears win big the longer the VIX remains above 15.20. Conversely, the bulls win big if the VIX drops back below 15.11. It's not rocket science. The VIX is currently trading at 16.46 with S&P futures down -11 about 90 minutes before the opening bell for the Tuesday trading session.

Five and six days ago, the bears flexed their muscles pushing the VIX above this critical bull-bear line in the sand. That was short-lived. The bears were slapped in the face quickly with the bulls jamming the VIX lower to send stocks higher.

The stock market, however, is a crapshoot right now since the Federal Reserve two-day policy meeting is beginning as this message is typed. The Fed rate decision and Chairman Powell's news conference is tomorrow afternoon. It should not be a market-moving event. Powell will likely try to simply kick the can down the road, feeding the doves and hawks equally, and get through the day without causing turmoil. The bigger story may be when Madame Lagarde, now ECB President Lagarde, provides monetary policy direction for Europe on Thursday morning; her talk will definitely move currency, bond, options, futures and stock markets.

Stocks are usually bullish the day or two in front of and through the Fed meetings 80% of the time so the bulls have the wind at their backs. This has not worked out that way thus far this week with the 20% playing out with negative action in stocks. Dip-buyers may be willing to buy the lows today hoping that the Fed buoyancy will create a mini-rally into hump day afternoon when Powell will bring the tablets down from on high and tell global traders how to trade. The central bankers are the market.

The full moon peaks at 12:12 AM EST Thursday morning so the overnight period is very bright outside these days. Stocks are usually bullish moving through the full moon so that is another tailwind for bulls. Of course, the stock market will ebb and flow depending on what Soybean Donny tweets before the US stock market opens. Isn't so-called free market capitalism a joke? America is best described as a 'faux free market crony capitalism financial system'. The truth is painful.

The 10-year Treasury note auction is tomorrow and very important. Then Pope Powell will be the focus Wednesday afternoon. Traders will be parsing his statement overnight into Lagarde's news on Thursday morning. In the US, Unemployment Claims and the PPI will be  released Thursday morning. Retail Sales hit on Friday morning.

Keybot the Quant is long and tracking volatility, retail stocks and commodities as the main drivers of stock market direction currently (so spend more time watching these Three Stooges than other market parameters). According to the Keybot algo, the bulls need VIX below 15.20 as soon as possible otherwise they are in serious trouble. Bears need RTH below 117.97 and GTX below 2451 which will create market mayhem. The movement of these three parameters tell you the direction of the stock market. There is likely choppy waters on tap until we hear from the central banker nobility; Pope Powell (Fed) and Lady Lagarde (ECB).

If stocks rally today but the VIX does not fall below the critical 15.11-15.20 support level, stocks will reverse to the downside and fall apart. 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 8:52 AM EST: WSJ and CNBC reports that the US and China are in discussions to delay the 12/15/19 tariffs. The happy talk sends futures higher. S&P +5. VIX 15.32. The VIX quickly drops to test the critical 15.11-15.20 battleground level. Futures are joyous but volatility is still thinking about things.  Copper +0.1%. 10-year 1.82%. 

Note Added Wednesday Morning 3:31 AM EST: The bears create a downward bias this week thus far which is typically not expected in front of a Fed meeting. The Fed decision day is here. Pope Powell places his purple robe across his thin shoulders and will stand at the podium this afternoon professing central bank wisdom. It is a one-two punch of central banker entertainment over the coming 30 hours; first Powell then Lagarde. The SPX finishes Tuesday down 3 points, -0.1%, to 3133, call it sideways this week. Traders are waiting for Powell to tell them how to trade. The central bankers are the market.