And so the alarm bells will soon be starting to ring as the VIX continued its stately progress lower yesterday and quietly moved into single figures and closing the session on the cash market at 9.19. The move lower simply reflects the relentless rise of the primary US equity markets, which continue to extend their bullish trends, constantly breaking out into new high ground, to the concern of many who are alarmed at this continued, and in their eyes, unwarranted run. For technical traders and in particular volume traders and investors, it’s a case of trade what you see, and not what you think, because with no evidence of any climatic price action representative of a major top forming, the big short remains on hold for the time being.
It will come, but not just yet, and as such we may see the VIX continue lower still (horror of horrors!) and move further from the longer term congestion which has seen it trade in the 10/13 corridor. Also note the low of 8.84 which was achieved in July and which was the precursor to some short term volatility which may indeed be repeated, but for now, it’s time to celebrate and enjoy the ride higher in equities, but with a cautionary view as the VIX descends further.
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