The VIX was up 15% today and is now in a definite up-trend.
VIX is quoted in percentage points and translates to an expected movement in the S&P 500 index based on options sales. Mathematically, the current VIX of 24 relates to an expectation of a 68% likelihood that the S&P will move up or down about 7% over the next 30-days. (Yes, I think it was invented by a Professor.) Bottom line is that this is not good for the market. Even though the theory says the move can be up or down, VIX moving up generally (but not always) correlates to the market moving down.
The decline in the S&P was steep enough to break the bottom trend-line and volumes picked up today so these factors may trigger more selling.
The S&P 500 is still only 5% down from the top and 8-1/2% above the 200day moving average.
The Navigate the Stock Market analysis was SELL today, but if you haven’t sold already it is hard to know what to do. The NTSM system calls tops and bottoms – a later buy or sell signal presents the market conditions, not a recommended action. We really don’t know how far the market may fall…or even if it will continue to fall. (See the page How to Use the NTSM System).
