VIX Volatility Daily Chart; Bulls and Bears Continue Battling at 200-Day MA

The VIX was highlighted previously as price continues testing the 200-day MA support at 26.34. The VIX 200-day MA is one of Keystone's important short-term bull/bear indicators. If the VIX is above the 200-day MA, the bears win going forward as equities drop. If the VIX is below the 200-day MA, the bulls are winning as stocks rally.

The Federal Reserve and other global central bankers have destroyed all price discovery over the last 11-1/2 years. The prices for all assets including stocks, bonds, real estate, vineyards, art, collectibles, antique and vintage cars, etc..., are pumped to the stratosphere on the easy money. The world is awash in liquidity. No one really knows what any asset is worth anymore. Well, isn't that special, as the Church Lady would quip.

The distortion created by the Fed, BOJ, ECB and PBOC, the four central banker horseman of the financial apocalypse, and another 20 central bankers in smaller nations, has destroyed the price discovery function in markets. Therefore, many odd ball things are showing up here and there and the VIX chart above illustrates the point. With the uber complacency and euphoric bullishness rampant in markets, a Black insert-the-week-day (Black Monday, Black Tuesday, etc...) and/or Flash Crash are on the table going forward. Pricing is erratic and unstable.

Considering the bigtime rally off the March low, the VIX should be hands-down below the 200-day MA without question. It's not. You can only say it is strange behavior and chalk it up to the sick financial world the corrupt central banks have created. Nonetheless, the rule holds. The line in the sand is VIX 26.34. Bulls win below and bears above.

The VIX began trading about a half hour ago and is at 27.666. S&P futures are up +17 during the early Monday hours on the US East Coast. Both the VIX and the futures are positive so one of them is wrong. The two move inversely over 90% of the time. Watch to see which one is wrong and whether or not the bulls have strength to drive the VIX below the 200, or not. 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 6:32 AM EST: VIX 27.89. S&P +13. Volatility sneaks up a tad so futures slip a bit. Both futures and volatility remain positive so one remains wrong. During OpEx week a Tuesday low typically leads to a Wednesday high so professional traders may be trying to front run perceived happiness expected in a day's time.

Note Added 7:27 AM EST: VIX 27.74. S&P +22. Volatility drops so futures pop. The coronavirus news is terrible on the weekend with new cases hitting records. Florida, California, Texas, Arizona and other states are hit hard. The bad news for humanity is great news for bullish traders. Since the virus news is worsening, it should be easier for the Congress and president to agree on new spending bills worth trillions as well as the Federal Reserve to keep printing money like madmen in the basement of the Eccles Building. Thus, stocks and futures are happy. Easy money makes the world go 'round.

Note Added 7:45 AM EST: VIX 27.666. S&P +23. Volatility drops back down to the same number as a few hours ago when the S&P's were up +17. So futures are higher and higher but volatility is not dropping as fast; that would be a bearish divergence. Time will tell if this matters. The business media narrative is that the markets are ignoring bad news. Wrongo. Traders are focused exactly on the negative news knowing that the politicians will keep providing stimulus that will drive stock prices higher. It's not rocket science. It's called crony capitalism.

Note Added 9:44 AM EST: VIX 27.666. The SPX is up 24 points, +0.7%, to 3208, above 3.2K, to begin the new trading week. Volatility and stocks are both higher so one of them remains wrong.

Note Added 10:30 AM EST: Wild stuff. The SPX jumps 35 points to 3220 and at the same time the VIX moves higher to 27.91. Something's gonna give.

Note Added 10:32 AM EST: SPX 3221. VIX 28.00. This is where the virtuoso is singing the high note and the glass is vibrating due to resonance and ready to shatter at any time. However, is the glass the market or is it volatility?

Note Added 10:37 AM EST: SPX 3217. VIX 28.01.

Note Added Tuesday Morning, 7/14/20, at 6:42 AM EST: Volatility was correct. The SPX peaks-out at 1:36 PM EST at 3235.32 on Monday and ends the day down 30 points, -0.9%, to 3155. That is a neggie d spankdown. The VIX ends at 32.19 a big jump higher and now sits at the 31.13 palindrome.