Putting Bollinger Bands around the VIX shows a dramatic squeeze in volatility. The bands haven't been this tight in years. The VIX has been drifting between 24 and 22 for almost 2 months now. It looks to be setting up for a major move upwards. The VXN is near an all time low. Quite ironic considering the savage Nasdaq bear market of the last few years. The lower it goes the more optimistic people feel. From a contrarian's point of view, thats not very bullish. If the VIX goes below 20, that would be my signal to load the boat with more sept dia and spx puts.
Low Vix numbers for the last 2 months coupled with a major Bradley Stock Market Model Indicator top around July 1st is setting up a major sell off in the markets. Time to lock in some profits. Gone too far too fast.
The VIX may be responding to a surge of supply from calls/puts that are caused by the scorchingly hot convertible market. Hedge funds that usually take these secondaries sell puts/calls on them either to earn more yield or to lock in some insurance.
I'd argue that the investor intelligence numbers confirm the complaceny in the market. Look at a 5 year weekly chart of the VIX. It's never "different this time". This will be a major turning point in the market.
from a respected stock market newsletter writer who was neutral / bearish and now thinks things look much better he cites the COPPOCK indicator as being extremely close to a buy signal Low Vix numbers for the last 2 months coupled with a major Bradley Stock Market Model Indicator top around July 1st is setting up a major sell off in the markets. Time to lock in some profits. Gone too far too fast
JB I've spent the last week or 2 looking very closely at the OOM puts, and working on figuring out possible positions, but not because of the VIX, but more as a result of looking at the daily index charts themselves, and the squeeze that has come into the tripple witching this time around. Maybe the markets are going to continue upwards, I don't know, but usually there will be some kind of a retracement for profit taking/consolidation. The rise from the recent lows has been very dramatic, and at a pace that would over the longer term be unsustainable IMO. So while not necessarily looking for a top here, certainly preparing for a down leg and next quarter puts look interesting indeed. I'm not even sure that any kind of down leg is pricing in OOM atm. It doesn't appear to be there... Your post is almost as if you read my mind - Same conclusion different method of arriving there Natalie
A low VIX simply means the markets are calm. They can remain calm for many months or years. Best advice is to not try to anticipate when the VIX may breakup. It could be 3 months, 6 months, or even 18 months away. I'm waiting for the VIX to break above 27 to get bearish on the mkt.
25 is a key level to break as well. That is the upside of the current range. I will want to be out of the mkt when the VIX breaks above 25. A move above 27 (previous double bottom support on the vix, now overhead resistance) would signal real short term danger. Any move in the vix until it breaks above 25 will be all noise.