VIX Spike vs VIX Swell

TVC:SPX   S&P 500 Index
Here's a visual summary comparing and contrasting a spike in the VIX versus a swell (slow move up).

When the VIX spiked, the market continued to move up. When the VIX swelled (a slower move up), the market sold off.

This concept, and the charts, were shared by Jim Cramer on MadMoney (CNBC) based on an analysis by Mark Sebastian.
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+5 Reply
PlayTheTrade TradingView
Thank you so much! I've been considering a username change to match Twitter. Maybe it's time :)
+1 Reply
I'm sorry but I'm not seeing any correlation between the VIX spiking and the market continuing to move-up. Each of the peaks of VIX spikes roughly align with a bottom in the market. And the base prior to a spike in VIX roughly lines up with a top in the market. I think this 'swell' vs 'spike' and any 'correlation' with different moves in the market has just been imagined. Perhaps the problem is in not understanding what the VIX is - a measure of the predicted future movement of the market, based on the price of out-of-the-money options.
+6 Reply
Technical analysis is certainly open to interpretation, more art than science.
+3 Reply
excellent post
+4 Reply
PlayTheTrade EBITDAtiger
Thanks, I appreciate that.
Makes good intuitive sense John. Especially the market moving higher once the VIX spikes to a high. I interpret this as the green flag to jump back in because the momentary market selling pressure has subsided.
When the VIX swells slowly or gradually drops it is more of a business as usual signal.
Very interesting take on the VIX / Market interaction.
Thanks for sharing.
+4 Reply
Thanks Jim. Up until recently, I haven't fully appreciated the VIX. The technical analysis journey is never ending...
I know you are sharing from Cramers show, thanks for that. As others mentioned and in my opinion the VIX is a bit more complex and this is a bit of an oversimplification. With that said, the Vix has just spiked and seems to be now swelling =D. I Just hope for a crash!
+2 Reply
Thanks, I appreciate your perspective.
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