The VIX is the most oversold on the 1D time frame using the cRSI than it has been during this whole rally and actually in several years. Now, that on the surface does not mean one thing or another. It could mean the market is finally comfortable with the S&P and things are all good. However, what concerns me is the fact that it has not returned back to its mean channel and the MACD is noticeable negative and looking to cross over. The MACD crossover is also not an absolute sign in the VIX either. It can ride along in the positive (green) for quite a while before it makes a bigger move. Another thing to note is that the VIX is sitting right on top of its normal channel. Again, not clearly anything as the VIX has been way above that channel since Feb.
Here is an interesting thing I noticed about the VIX. You can clearly see the correction after the S&P Sept FOMO top at two peaks. Notice that the VIX did not settle all the way back down in between. It stayed elevated during the whole correction and only went back down after the recent rally even though that rally was not that much higher. Now remember that the VIX has not settled back down to its previous levels since it spiked in March. Does this mean we are sitting in the middle of a massive correction and there is still a big drop to come? Don't know, but some food for thought.
Now lets turn to the VVIX. That effective is the volatility of the VIX (derivative of sorts from your calculus days). There we can see a clear trend of a higher lows and a support trend line forming (weekly and monthly). This supports that idea that the VIX should be bottoming and looking to move up. You can also see that it recently (Nov 27) was below the bounds on the cRSI and made a bottom.
I also have my "custom" VIX/SPX indictor. The point behind this ratio is to look for the VIX rising more relative to the SPX. The VIX has a tenancy to go exponential when it goes up, thus we should see VIX increase faster than the SPX and the VIX/SPX ratio should also start to increase (larger numerator over a smaller denomenator). Now, this again is showing signs of life, but the signs are still weak. The cRSI is oversold and the RSI is getting close to a cross over.
All in all, nothing is conclusive yet. However, there are signs starting to show of some form of correction up coming. If you follow my other posts, this is most likely linked to the topping of the S&P at the 1.236 fib level. I am surprised that we are not seeing it rise more like we did at the end of August for the big FOMO top. That 1.236 level is very important. Maybe all the bears gave up? Maybe the bulls have won? I will keep you posted.
Here is an interesting thing I noticed about the VIX. You can clearly see the correction after the S&P Sept FOMO top at two peaks. Notice that the VIX did not settle all the way back down in between. It stayed elevated during the whole correction and only went back down after the recent rally even though that rally was not that much higher. Now remember that the VIX has not settled back down to its previous levels since it spiked in March. Does this mean we are sitting in the middle of a massive correction and there is still a big drop to come? Don't know, but some food for thought.
Now lets turn to the VVIX. That effective is the volatility of the VIX (derivative of sorts from your calculus days). There we can see a clear trend of a higher lows and a support trend line forming (weekly and monthly). This supports that idea that the VIX should be bottoming and looking to move up. You can also see that it recently (Nov 27) was below the bounds on the cRSI and made a bottom.
I also have my "custom" VIX/SPX indictor. The point behind this ratio is to look for the VIX rising more relative to the SPX. The VIX has a tenancy to go exponential when it goes up, thus we should see VIX increase faster than the SPX and the VIX/SPX ratio should also start to increase (larger numerator over a smaller denomenator). Now, this again is showing signs of life, but the signs are still weak. The cRSI is oversold and the RSI is getting close to a cross over.
All in all, nothing is conclusive yet. However, there are signs starting to show of some form of correction up coming. If you follow my other posts, this is most likely linked to the topping of the S&P at the 1.236 fib level. I am surprised that we are not seeing it rise more like we did at the end of August for the big FOMO top. That 1.236 level is very important. Maybe all the bears gave up? Maybe the bulls have won? I will keep you posted.
Comment:
End of day Friday update.
Not a great end of the week but things overall are still higher than the beginning of the week. Still not clear direction but flat is still good for the bears.
VIX - Broke below the green support but above recent low
VVIX - Broke below the green support but held the pink.
VIX/SPX - Still no confirmation yet, but that MACD is getting close and the low for today as still higher.
Not a great end of the week but things overall are still higher than the beginning of the week. Still not clear direction but flat is still good for the bears.
VIX - Broke below the green support but above recent low
VVIX - Broke below the green support but held the pink.
VIX/SPX - Still no confirmation yet, but that MACD is getting close and the low for today as still higher.
VIX (4h)
VVIX (4h)
VIX/SPX (1D)