Wednesday, January 16, 2008

$VIX - Volatility Index S+P


The $VIX made a spike higher during the August lows in the market. Since that time, the DAILY chart shows a SYMMETRICAL TRIANGLE from which the $VIX just broke out to the upside. Considering the S+P 500 is now squarely under the 1370 August lows commentators have mentioned that the $VIX should be higher at this point and therefore the Broad Indices have further to go on the down side. Will we test the August highs in the $VIX? Let's see...


On the WEEKLY charts, we see the $VIX and its movement out of the low volatility mode that characterized the rally in equities over the past four (4) years. Then at the August low in the S+P 500, the $VIX began a new phase trading over the WHITE DASHED MID LINE and forming a SYMMETRICAL TRIANGLE CONSOLIDATION after the huge spike from 9 to 37. Let's see if we get a full on massive upside breakout to the upside here coinciding with a selling climax in equities?


The $VIX on the MONTHLY chart shows the high volatility environment that characterized the equity market during the climax and decline of 1998-2002. Subsequently,the market entered a period of unusually low volatility which played out on the charts in a rounded bottom. Finally, with the August downdraft in the market, volatility "came back into the market". The BLUE TRENDLINE is providing support to the upside...

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