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VIX Has Stopped Going Down

TVC:VIX   Volatility S&P 500 Index
Potential warning signs continue to appear for the S&P 500 . We’ve cited narrowing breadth and the rising wedge. Today we’re looking at a highly related symbol: Cboe’s ever-popular Volatility Index, or fear gauge.

The main pattern on VIX is its mild uptrend since the beginning of July. The S&P 500 made new all-time highs 11 different times last month, but the VIX didn’t make a single new low.

Next, July 19’s high was more than 3 points above June’s high – even though SPX made a higher low. In other words, VIX is no longer confirming SPX's uptrend. Similar divergences have occurred before other pullbacks, especially in January and September of 2018:

Traders shouldn’t reach too many conclusions based solely on the chart above. This application of VIX is similar to using indicators like MACD , which can show bearish divergence for some time before a pullback occurs. At this point it’s just another potential sign of spreading weakness.

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Comments

thanks for sharing such a great idea!
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good observation
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100% agree. Look at the stochastic on the weekly time frame. Get ready for another Vixplosion:
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