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Friday, April 17, 2009

Quick Look at The VIX

The VIX, or the "fear gauge" has closed its long standing gap from September. Also the 50 DMA is getting ready to crossover the 200 DMA in a bearish move. But I don't think that matters much with the VIX. The last time it did this, the VIX bottomed within 5 trading days.

The stochs are pretty much bottomed. They could of course flatline or embed under 20, but its getting awful far away from its 20 DMA for my liking. But the stochs very much support that the VIX is short term oversold on the daily no less. And this still is a bear market so thats meaningful.

What does catch my eye is we now have some positive divergence occuring in more than a few indicators and over a span of 4 months hold some significane. The MACD is the most obvious. The RSI is barely confirming this divergence but it is nonetheless as of Friday's close.

Overall, a hard bounce in the VIX would equate with a collapse of the SPX. Maybe social mood needs a little fear reminder that not all is well with the world. It would be ironic if the VIX produced an unclosed gap up Monday at exact same spot it did in September.


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