There’s a common misconception that when the VIX is making a new low its bearish for the S&P 500 (SPX). The belief is that the VIX making a new low represents excessive optimism and should be viewed as a contrary indicator. However, many times the SPX makes important peaks after the VIX has bottomed out. The VIX is derived from Put/Call trading. A higher VIX bottom denotes a subtle shift in sentiment – increased Put buying.
In June I posted about a VIX topping signal which was quickly invalidated. Now there’s another VIX topping signal, this one has lasted much longer than the first signal.
Watch for a break above the declining trendline. A move above this line could indicate a large SPX decline is developing.
In June I posted about a VIX topping signal which was quickly invalidated. Now there’s another VIX topping signal, this one has lasted much longer than the first signal.
Watch for a break above the declining trendline. A move above this line could indicate a large SPX decline is developing.
