Inside 12631, member @TysonBrowning noted in our chat room today just how quickly the VIX spiked once it dipped below 30. I have been watching the volatility index closely of late, not to perform technical analysis or anything too rigorous on it, but just as general gauge of whether or not the wild and random price swings we have seen would subside. As you know, the VIX is nicknamed the “fear index,” as a proxy for the action in the options market and expectations of market volatility.
There are plenty of traders who follow the VIX more closely than I do, but my point is that volatility is stubbornly remaining elevated here. Equity bulls want to see the VIX not only sink below 30, but trend down below 20 too. In the past, after several months or quarters of a spiking VIX, we would often see a quick collapse as equities calmed down and began to trend higher. The time around, it is not so easy to short volatility and print a bunch of profits.
Beyond the volatility, the S&P 500 is still holding above the prior multi-month trading range, which to me is of the utmost importance. Hence, despite the waters remaining choppy the bulls are in hanging tough enough to not give up on them just yet.
