DTT Buzz

The Volatility Index ($VIX) charts the volatility levels in the S&P 500. A high VIX reading indicates a market that is very uncertain and fearful. A low VIX reading indicates a market that is content and comfortable.

Let's take a moment to analyze the 1 year Chart on the VIX....

As you can see on the chart above, the VIX recently broke through a solid 1 year uptrend. Since breaking the uptrend line, the VIX has created a downtrend channel causing heavy downside pressure in the indicator (bullish for the market).

Yesterday, the VIX pushed just below 16 before seeing a sharp upside reversal. I'm personally watching this downtrend channel resistance very close here. If the VIX breaks through the downtrend channel resistance (best noted on the 60 day chart), it is likely that it will see continued upside momentum. Upside momentum in the VIX would translate to downside pressure in the market. Therefore, a break of this resistance will prompt me to take on some bearish positions.

What are your thoughts on the VIX?

Regards,

Nick Fenton
Sr. Trade Analyst


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