VIX Volatility Daily Chart

It is surprising that the VIX has remained above the 200-day MA during the entire recovery rally; extremely surprising. The March bottom was identified by the panic and fear verified by the VIX up at 85. Traders threw out the bathwater, the baby, the kitchen sink and whatever else they could find. Timmy Trader could no longer handle the carnage in late March and jumped out of the trading floor window. Everyone was aghast. Fortunately, he was on the ground floor.

As the S&P 500 (SPX; the US stock market) rallies through April into May, higher highs in stocks are met with lower lows in volatility. All is right with the world (the VIX and SPX move inversely to one another over 90% of the time). However, the SPX overtakes its 200-day MA in late May. The VIX comes down to stab through the 200 and verify the stock market bullish joy, but it does not. The VIX comes down in late May and balks at the 200. Then in late June the bulls (central banks) try to jam volatility lower again but they cannot keep the VIX beachball underwater; it pops up again.

The VIX needs to drop below the 200-day MA, otherwise the rally is over. Note that even though the VIX did not lose the 200 when the SPX gained the 200, the VIX did come down for a lower low in early June which reinforces the higher high that printed on the SPX (bulls are okay). The jury remains out. Stocks are staggering sideways like Uncle Pete at the family reunion last year.

The red bar at 36.45 shows the bull-bear line in the sand identified by the Keybot the Quant algorithm that is currently long the market. Market carnage will begin above 36.45. It is amazing that the VIX has not lost the 200-day MA. This fact alone verifies how the central bankers control stock market direction and keep the game going. The VIX ended the week at the highs. Utilities ended the week at the lows. The NYA went sub 12K. The SPX is only 90 points away from the wheels completely falling off the stock market bus.

The new moon peaked for the month about 4 hours ago the darkest overnight time of the month. Armed forces with superior night vision technology will be carrying out covert raids over the coming days; it's like shooting ducks in a barrel. Equities are usually soggy (about two-thirds of the time) moving through the new moon. Keep an eye on that potential two-leg bull flag pattern shown in light blue. The first leg was about 20 points, then the textbook sideways to sideways lower consolidation flag forms, then the second leg begins which would target 50+ so keep watching that.

Traders are waiting for more triple R cuts from the PBOC and are hoping for an announcement before futures begin trading at 6 PM EST and Asia markets begin opening. Traders and investors need central banks to keep pumping every few days to keep the party going. It's all too beautiful for over 11 years running. Bulls are hoping for a triple R cut from the filthy communists in the hours ahead that will keep the stock market elevated. US bank stress test information is released on Thursday. If the PBOC does not announce a triple R cut, the stock market will likely begin the week soggy. The PBOC cut the triple R's at the July 4 US holiday two years ago.

Utilities fell out of bed last week and this is a very serious matter. If UTIL loses 763 this week, the stock market may crash. At the least, the SPX will probably ditch 30 points within one-half hour of the UTIL 763 rupture, if it occurs. Bulls are okay at UTIL 771 where the week begins.

Summing up the VIX discussion, the 200-day MA at 25.26 and Keybot's 36.45 rule the roost. The VIX has been bouncing around in between which explains the sideways indecision in the stock market. If the VIX pops above 36.45 and trends higher, it is over for the stock market with big losses on tap. If the VIX continues moving through 25.26 and 36.45, the stock market will continue chopping sideways with a slight positive bias. If the VIX falls below 25.26, it is game-on for bulls with stocks catapulting to new highs. The table is set. The VIX begins trading at 3 AM EST. 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.