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Volatility Keeps Sliding as the S&P 500 Holds 3800

TVC:VIX   Volatility S&P 500 Index
The volatility index has been falling all year, and now may be preparing for a push below the key 20 level.

This chart highlights the descending triangle on VIX . It began when the market slumped in late October, with another spike on December 21. There were additional lower highs on January 4 and 12.

VIX has also dropped in six of the last seven sessions and has remained consistently under its 50-day simple moving average ( SMA ).

Next is an important thing that never happened: The bears never followed up the S&P 500’s selloff on January 4. Instead, buyers stepped in below 3700 and quickly sent the index above 3800. The result? A bearish outside day morphed into a bullish outside week.

Last is the upcoming calendar of events. Earnings season officially starts on Friday, likely followed by significant stimulus from Congress. On top of that, we could also see things returning to normal as vaccinations continue to spread.

All those trends suggest that more positive catalysts may be coming. VIX could be under pressure as the news trickles in.

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Comments

I wouldnt say it's been sliding recently .. we've basically gone sideways since early December and considering how equities have been rallying it would be of some concern were I bullish here. Time will tell.
+6 Reply
I disagree this fundamental analysis, and strongly disagree with the technical analysis.
Fundamentally, I think the only thing holding up the stock market is an expectation of stimulus and I don't think it will take much for the market to tank. I'm pretty sure I'm not the only one waiting for a 2.5% 30yr T-bond to dump all my stocks and get in at that level before the Fed is forced to drop rates to zero or lower.
Technically, nothing could be clearer than seeing this falling wedge, typically a break higher is the most probable action. I think this will play out within a month.
+3 Reply
high volume, yet not enough buyers, therefore price drops
and it keeps coming and coming
+1 Reply
Jazz777 tt10001
@tt10001, look at the recent volume on UVXY.
+2 Reply
so, good
Reply
All good things come to an end,
optimism is fading.
Investors and professionals alike all around are asking why are prices this high. Fear is creeping into the market and because the extreme use of leverage and speculation it will only require one small bear poke to make this thing tumble into chaos. I believe smart money pulls out in the next two weeks causing a roaring fall to levels you wouldn't even consider possible.
Biden and congress are forced to sign an even larger stimulus in march due to these circumstances which is exactly what this market wants.
Reply
You have absolutely no idea what you are saying and you didn't even chart vol you just said its going down while the s&p stays flat. lol no shhh it would. I actually believe vol is about to come back in a big way and I actually charted it. do something useful with your time rather than stating the obvious.
Reply
Agree with this. The future is looking more and more optimistic. Although I am not losing sight of the earnings calendar. Might see some slowdowns:

"Last is the upcoming calendar of events. Earnings season officially starts on Friday, likely followed by significant stimulus from Congress. On top of that, we could also see things returning to normal as vaccinations continue to spread."
Reply
Question though - what does the 20 level represent?
Reply
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