By Lawrence G. McMillan
$VIX spiked up to almost 20 last Friday and then reversed back downward to nearly 17. Currently, it stands at 17.82. A spike peak reversal of that magnitude is at least a short-term buy signal for the stock market. $VIX has probed to or above the 19 level four previous times since mid-April, and a tradable stock market rally has followed each time. Will this be the case again this time, considering that there are other, more negative, indicators at work as well?
By Lawrence G. McMillan
There seems to be a bit of a hangover from Friday’s action. Despite some potentially positive movement in $VIX, the market can’t seem to rally today. $VIX spiked up to nearly 20 on Friday and then fell back to almost 17. A reversal of that size is a positive factor for the stock market. In fact, $VIX was actually down on the day Friday, even though $SPX was off 13 points and the Dow was down nearly 100. That is an unusual and normally positive divergence. The fact that it hasn’t caused a market rally could be a cause for concern.
By Lawrence G. McMillan
The market was extremely strong on Wednesday, but it is unclear if it was merely a double bonus of a) an oversold condition, and b) a strong commodity market. We have recently seen the stock market move in conjunction with the commodity markets, and it is possible that Wednesday's move was exacerbated by the big move in commodities. There are plenty of both bullish and bearish signs to gather from Wednesday.
