VIX Volatility Daily Chart

The stock market bulls are keeping equities elevated by goosing the retail stocks and banks. These two sectors remain key. At the same time, volatility is playing a big part in determining stock market direction ahead. The VIX 200-day MA at 14.97 is a key bull-bear demarcation line that dictates a near-term positive or negative trend. In addition, the Keybot the Quant algorithm, that is currently long, is tracking 13.60 with great interest as the key bull-bear line in the sand. The VIX is at 15.68.

Thus, if the VIX remains above 14.97, the bulls got buptkis and the bears will win going forward. It will not matter today if stocks rally if the VIX remains above 14.97; equities will roll back over to the downside and become sick and weak again. If the VIX drops below 14.97 but remains above 13.60, the relief rally has a few days of legs, but it has a shelf life and will not continue; the stock market would be expected to become sick again after a day or few of rallying. If the VIX drops below 13.60, the bulls will throw a confetti parade as stocks would then be on their way higher and the sky is the limit. It's not rocket science. 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 9:36 AM EST: Bingo. The VIX comes down to tap on the 200-day at a LOD at 14.94. SPX 3290. Banks pop higher. The VIX bounces off this critical level on the first try. The stage is set. Watch VIX 14.94-14.97 like a hawk; it tells you who wins going forward.

Note Added Thursday Morning, 4:30 AM EST: The Fed flaps its dovish wings yesterday afternoon, to no surprise, and the VIX trades choppy. The VIX teased that 14.94-14.97 support, and bounced, and ends the day up at 16.39. Bears win. It is interesting that S&P futures are down -18, they were down -28 a couple hours ago, despite the Fed dovishness. That is a change. Typically a 25 to 30 point rally will occur in the SPX after every dovish proclamation by the Fed. Is the jig up for the Federal Reserve and other global central bankers exposing them as the Wizard's of Financial Oz pulling levers and pushing buttons behind the curtains? This 11-year Keynesian financial experiment only continues if traders and investors trust that the Fed can always save the day. If that trust wavers and confidence is lost, it's ovah, as they say in Brooklyn. The financial future of America rests on Chairman Powell's thin shoulders. The game continues.