VIX Volatility Daily Chart; Bulls and Bears Continue Battling at the 200-Day MA at 26.79

The Keystone Speculator's VIX 200-Day MA Cross indicator, a key short-term market signal, is sitting on the fence. Friday's red candlestick shows the equal fight between bulls and bears that straddle the key 200-day MA at 26.79. The bulls win on Friday closing the VIX at 25.84, below 26.79, so this will provide lift to equities next week, if it holds. The stock market (SPX) and volatility (VIX) move inverse to each other about 90% or more of the time.

When the bulls saw they were losing ground on Friday, Fed Chairman Powell ran to the closet in his office at the Eccles Building retrieving his shiny leather jackboots. He was pleased to see that Charlie Evans did a great job with the spit-shine. Powell quickly pulls the jackboots over his Wal-Mart socks and begins kicking Uncle Vix, the guardian of volatility. VIX drops to the ground where Powell then holds his jackboot against the throat of volatility keeping it depressed. Voila. Stocks stabilize on Friday and go into the weekend without a major last minute selling event taking place. The Fed is always quick to place its jackboots on the throat of volatility, keeping it down, and maintaining elevated stock indexes of course to protect the wealthy elite class that own large equity portfolios. It's called crony capitalism.

During the entire stock market rally off the bottom, the VIX did not move below the 200-day MA until the last few days. That simply does not happen. For such a robust rally with equities, the VIX should be under the 200. What that verifies is the massive power of the Federal Reserve, other central banks, and government stimulus in pumping stocks to the stratosphere fueled by liquidity out the wazoo. There is so much money laying around everywhere, the world is awash in central bank liquidity, that folks are picking it up and saying why not buy some AAPL, AMZN, some NFX, maybe TSLA; when money is cheap and readily available, especially for over 11 years, people become complacent and start investing stupidly, and buying and financing frivolous and unnecessary products and equipment (bad decisions). Obviously, this stuff ends in tears. Don't be stupid.

So the table is set for Monday morning. Bulls win going forward if the VIX remains below 26.79. Bears win if the VIX pops above 26.79 moving higher. Stock market weakness is long overdue because of the one month of complacency as evidenced by the low CPC and CPCE put/call ratios. The Fed keeps the VIX beachball underwater for now but it may slip out of their hands next week. The VIX begins trading at 3 AM EST Monday morning and will provide a heads-up on how the US trading session will move (inversely) that does not begin trading until 6-1/2 hours later. As volatility goes, the stock market will go in the opposite direction. 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 Monday Morning, 7/27/20, at 7:05 AM EST: The VIX is at 26.33 with S&P futures up +13. The VIX is fluctuating above and below the 200 deciding what to do today.