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Death Cross Forms On SPX:VIX Ratio

By Candy MathesonStock MarketsJan 17, 2022 01:50AM ET
www.investing.com/analysis/death-cross-forms-on-spxvix-ratio-200614924
Death Cross Forms On SPX:VIX Ratio
By Candy Matheson   |  Jan 17, 2022 01:50AM ET
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I last wrote about the SPX in my 2021 Market Wrap-Up and 2022 Forecast on Jan. 1.

The SPX closed (around 20 points below the 50-day moving average) at 4662.85 last Friday, as shown on the following daily chart. The 200-day moving average is well below at 4420.84, which is slightly above the yearly Pivot Point for 2022 of 4412.61 (identified in my above-mentioned post). Both moving averages are still in uptrend.

The SPX uptrend is wavering and price is caught in a large and tightly bunched-up consolidation range.

SPX Daily Chart
SPX Daily Chart

A 50/200-day moving average Death Cross just formed on the SPX:VIX Ratio, as shown on the daily ratio chart below...at variance with the moving averages on the SPX.

It's a warning signal that weakness has crept into the SPX and we may see it pull back or correct soon. A 10% drop would send it down to 4200, while a 20% drop would take it to 3730. Alternatively, it may be a bear trap.

These two scenarios should become more clearly defined after the next Fed meeting on Jan. 26.

In the meantime, trading will likely remain volatile and whippy...especially below 4700.

SPX/VIX Ratio Chart
SPX/VIX Ratio Chart

Death Cross Forms On SPX:VIX Ratio
 

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Death Cross Forms On SPX:VIX Ratio

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Comments (3)
Sunday Promise
Sunday Promise Jan 17, 2022 4:39PM ET
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please make people show me how to trade
Kenneth Gardner
Kenneth Gardner Jan 17, 2022 2:09PM ET
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Great article. Almost impossible to find articles on VIX vs Market, especially when both fall in unison.
Shane Zhang
Shane Zhang Jan 17, 2022 12:25PM ET
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Both golden cross and death cross only offer you 50 percent.  If the last one was a winner the next one will almost guaranteed you a loser
 
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