how about a chart going back at least as far as last summer's VIX lows? I can't put one together from where I am.
The VIX under 20 is like the shoe shine boy giving you stock tips. You better take your money and run. This is going to be a monster top. Just wait and see where we are in sept.
thanks for posting that chart. it could trend lower without being catastrophic. if something else indicates a top, say, short interest or something, it would be more conclusive.
There are other indicators signaling a top. Look at the Investors Intelligence and other sentiment numbers. It's all wildly bullish. Look at some of the stocks leading this rally. Junk internet stocks with no hope. Other tech stocks are back trading at obscene p/e ratios. This latest rally looks like a dying gasp that will set up a double top at 9400. I see at least a 1,000 point decline over the next 2 months.
I wouldn't call the II numbers indicative of a top. Almost by definition market tops are associated with high levels of bullishness. However, there is a cause and affect issue here and it doesn't necessarily mean that high II causes a top. Lets not forget that for 3 years many pension funds as well as foreign funds and insurance companies have been pulling dollars out of the US. Most recently in the run-up into the war when we almost hit new lows before bottoming. That means that even with high levels of bullishness there is still an enormous amount of money that is finding its way back into the markets. If you want to see find chinks in the armor, we have to start seeing junk bonds start to break down. However, they aren't. They continue to outperform the market and new issuances are occurring at record levels. CPN's 3.3B deal this past month is remarkable considering their debt was trading at 25% yields a year ago and the stock was at $1 and change. If companies get to rollover their debt then everyone is happy at least for awhile. People stay employed, capex gets reinstated, etc. Don't expect a crash anytime soon.
VIX is more reliable on signaling a bottom than a top. Look at the recent range. Sentiment is lopsided, true. The bull bear differential is as great or greater than the differential at past tops, and the differential has been "extreme" for a couple of months, while price has persisted upward. It's one thing to be bullish when investor are putting their money at work and another to be bullish when money is leaving the market. The bulls are right until they are wrong. The bears have been wrong all the way up. All this is a signal to be alert for a correction or a consolidation. Market is stalemated now, finding definite support and definite resistance.