VIX Volatility and SPX S&P 500 Daily Charts

Everybody is bullish the stock market. Father Regis at the local Parish took all the collection basket money to a broker in town that placed it all in NVDA stock. The shoeshine boy, doorman, taxi cab driver, and Uber and Lyft drivers, are telling everyone to buy the market before it is too late. They are placing entire paychecks in semiconductor stocks and the broad indexes. Life is one big party with nothing but riches and joy ahead for all. 

The multi-year lows in the CPC and CPCE put/calls tells you that a significant top is at hand for the US stock market and can occur any day forward. Perhaps a look at volatility may shed light on the matter.

At the end of March, all hope was lost. Timmy Trader ran across the trading floor and jumped out of the window because he could no longer handle the irate calls from clients losing money hand over fist. Fortunately, Timmy is on the ground floor. The VIX continued higher over 30 as the blood flowed on Wall and Broad. Of course, stocks tumble lower when volatility rises but at the end of March it was time for a relief rally.

Who knew that the relief rally would be a rocket ride setting records with the SPX gaining +1% per day for 14 straight days. Relief rallies in downdrafts are known to be sharp and strong but this one was for the record books. The VIX collapses into the mid-20's as April begins sending stocks higher. The VIX and SPX are inversely correlated and move opposite to one another over 90% of the time.

Note in early April, volatility pops higher again but the SPX price only moves sideways and does not drop. That is testimony to how fast everyone turned bullish and no one wanted to miss the bull train leaving the station. All aboard! This Train Is Bound For Glory. The buy the dip crowd is unstoppable. The worse the news, the higher the stock market. People are trained to be optimistic so they will be pie-eyed happy buying stocks until they are smacked in the face with a 2x4.

Everything is groovy during April with the VIX dropping and stocks running higher, until 4/17/26. Perhaps filing taxes dampened the mood. The VIX bottomed a week ago, about when the put/calls printed their multi-year lows. The VIX is higher ever since, but the stock market does not drop, it continues higher. Something is wrong with this picture. Either the VIX must immediately begin dropping to a 16 and 17 handle (thin green line), or stocks are going to roll over and die.

The VIX spent much of the week above 19. The blue circle shows you a distribution day. That is the institutions (so-called smart money) selling to the dumb money at the top. The dip-buyers and fearless bulls such as Joe Sixpack, Ronnie Retail, Carmelita Bagholder and Savita Sucka are buying stocks like crazy believing they will be on easy street in just a few short weeks or months. Every top needs suckers.

The Keybot the Quant algorithm is calling out VIX 19.74 as a key line in the sand. Bulls are fine if the VIX remains below. If the VIX moves above 19.74, the wheels will start falling off the stock market.

The SPX prints an all-time high at 7168.59 and all-time closing high at 7165.08 on Friday, 4/24/26, with rampant complacency, fearlessness, and uber bullish optimism. What could possibly go wrong? Monday would be a perfect time for a crash maybe a Black Monday, or a Black Tuesday? In a white room, with black curtains, where the shadows run from themselves. White Room by Cream. 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.