you misinterpreted this. People who "short VIX" do not bet "on the market going down". They are actually betting on the market NOT going down, at least not by a lot. They bet on a continuation of the "0-0.2pc up every day" trend, and an even more predictable, slow and steady rise.
Out of curiosity, doesn't this completely contradict what @Robert Morse just said in this post here? https://www.elitetrader.com/et/thre...-vix-short-sellers.314207/page-3#post-4532348 So on the one hand, you're saying too many people are betting on the market going down, which would cause VIX to go up, and yet Robert is saying that he is seeing too many people betting that the VIX will always come back to the lows, and hence betting on not too much market volatility. Unless I'm misunderstanding something, I see two different opinions from two respected posters. Are more people playing this market long or short, from the point of view of what the crowd is doing? Surely if you think its gonna drop you wouldn't be shorting the VIX. I guess what I'm saying is that every time I come across a post that seems to indicate that one side is very heavy, there is just as much reliable info pointing to the opposite position.
Isn't there usually a warning which is some large key player company(s) falling over? Is there anything like that happening atm? I can't think of any. Are realestate companies going bust?
Overbought has lost it's meaning with the SP500 RSI14 above 70 for 15 or so day. Some good points in this article.
Apparently the pattern , 10% year to august rally followed by low volatility September, indicates a 92% chance of a 6% rally into the end of year. https://www.cnbc.com/video/2017/09/28/futures-now-september-28-2017.html?play=1 4 mins in.