Monthly line charts are so simplistic; yet so important to analyze.
If you've read my previous DOW posts you know we are closely following the 2000-2002 bear market cycle vs. any other bear market and this chart further confirms my thoughts.
Notice how the VIX today (2017 to present) vs. the VIX 1994-2000 timeframe is diverging with the S&P. Both are making higher highs and higher lows until something breaks. In the 2000-2002 case we had the dot com bust (Rate of Change in very high risk/internet stocks plummeted) while today we have the Bond bust (Rate of Change within the bond market has plummeted). Towards the end of the VIX/S&P divergence (in the 2000-2002 case) the VIX ended up remaining "in trend" while the S&P lost about 46% over a 2 year period (see below chart). The VIX remaining "in-trend" for such a long period of time was a warning that something was going to break at some point and the indexes eventually lost a fair amount of value over a 2 year period.
In sum...my thoughts:
If we close Dec VIX below the blue dotted; Oct low will hold
If we close Dec VIX above the blue dotted line; Oct low will NOT hold.
If you've read my previous DOW posts you know we are closely following the 2000-2002 bear market cycle vs. any other bear market and this chart further confirms my thoughts.
Notice how the VIX today (2017 to present) vs. the VIX 1994-2000 timeframe is diverging with the S&P. Both are making higher highs and higher lows until something breaks. In the 2000-2002 case we had the dot com bust (Rate of Change in very high risk/internet stocks plummeted) while today we have the Bond bust (Rate of Change within the bond market has plummeted). Towards the end of the VIX/S&P divergence (in the 2000-2002 case) the VIX ended up remaining "in trend" while the S&P lost about 46% over a 2 year period (see below chart). The VIX remaining "in-trend" for such a long period of time was a warning that something was going to break at some point and the indexes eventually lost a fair amount of value over a 2 year period.
In sum...my thoughts:
If we close Dec VIX below the blue dotted; Oct low will hold
If we close Dec VIX above the blue dotted line; Oct low will NOT hold.
Comment:
Please note: The VIX "opened" Dec above the blue dotted line so although it looks right now to be crossing the dotted line all that matters is where it closes on Dec 30th. Line charts only take open & close prices into account...wicks are NOT included.
Comment:
December VIX not breaking down but instead has made a U turn to the upside on closing.
Comment:
Almost getting ready to hit a very important up-trend line on the weekly. If you are a bull you want to see this uptrend line violated by getting below the red/yellow dotted lines. If you are a bear; it must hold.
Comment:
VIX has thrown off a warning sign to the bulls IMO. Inside weeks at lows typically lead to spikes in the VIX in the coming weeks. Don't say you weren't warned.
VIX has thrown off a warning sign to the bulls IMO. Inside weeks at lows typically lead to spikes in the VIX in the coming weeks. Don't say you weren't warned.
Comment:
They are keeping us in limbo yet again...Jan closed above the trend line.
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The 5 year divergence broke below the uptrend line this morning. IMO this means a muted VIX for a bit; my guess is we might not see a 30 VIX for a bit.
Comment:
Monthly uptrend line is still in tact and keeping me on my toes!
Comment:
Monthly uptrend line that began in 2017 has been violated however since 2017 the VIX has been making higher highs & higher lows (see the blue circles) so until we have a monthly close below the Nov 2019 low the VIX technically remains in a bullish uptrend. My thoughts-the break down of the VIX uptrend IMO is a signal that VIX spikes will be contained below 40 on a monthly close over the next 3-7 years...at some point (perhaps this summer) we might break below the Nov 2019 lows and once this occurs the VIX will "try" to get to the COVID high but it will fall short as it has in the past. Just my two cents...
Comment:
Just a reminder...inside weeks within the VIX complex usually equate to a bullish VIX; especially ones that have a green closing week inside a red previous week. Nothing is 100% but you be the judge of how well they have performed in the past.