As you can see, the VIX has been forming lower highs, but always inside the symmetrical . This week we will see a breakout, with the question being in what direction.
Here is what we know:
- The earnings' season only starts next week, so company fundamentals won't play a role in the direction of the VIX .
- SPY is on the rise this week, on hopes Europe is now recovering from the peak (and the US will recover soon as well).
- There are some hopes Russia and Saudi Arabia will reach an agreement to significantly lower oil production, which will push oil prices up.
I struggle to see any bull case right now, because:
- The economies around the world are suffering and the projected fall in is huge;
- The recovery in Europe is due to people staying at home, and we haven't yet seen a plan as to what happens next;
- The OPEC meeting has been postponed, and anything can happen, including them not reaching any deal.
Despite infinite , I am expecting the VIX to breakout above the symmetrical triangle this week. if it does and we see coming back, we will likely see major indices finding new lows.
What are your thoughts?