Friday, January 22, 2010

VIX Stretched Over 20% From The 10ma While SPX in Uptrend

The VIX provided some notable action Thursday. It closed up over 19% and is now stretched over 20% above its 10ma. Below is a test of other times we saw the VIX stretched this much while the SPX was trading above its 200ma.

The VIX is one of several indicators I am seeing that is suggesting a bounce is near.


Michele said...

The daily Vix has gone exponential in a big way over the last two days. If that was a stock chart, I'd get out right now. Also, note what happened on the daily Vix going back one year when we had a big pop in one day that extended up over the upper BB: 12/31/09, 10/30, 10/28, 8/17, 3/2, 2/23, and 1/20.

The very next day, the Vix declined, taking out all of the rise within 3 days. This held true even during the insanity during October and November '08.

It is even true on the weekly chart all the way back to 1990 (as far back as my data provider shows). I found only one exception. If you think conditions now are the same as 8/10/98, then the Vix will continue higher this week. Othwerwise, the 40 other cases where the Vix put ina green weekly candle, in the next week it went lower. (I'm also not counting the truly extraordinary action from the fall of 08, although even then, the Vix finally did come down).

Also, the bears on the MW boards are out in full force this weekend thumping their chests. I'll have my long hat on tomorrow.

That said, on the monthly chart, the Vix looks more like it's bottoming than topping. That chart does not bode well for the end of the first quarter or this spring.

Anonymous said...

I am a buyer. I am looking to buy high yield stocks. If the market keeps going down, i have a stable 5%+ dividend. If it goes up, I also have capital gains. I am only worried about certain stocks not being able to pay out dividend. SO I only buy dividend aristocrats (20 years history of paying ever increasing dividends)