The VIX is once again very depressed, along with the bears’ spirits.
We have for much of 2018 been trying to figure out if the VIX is replicating Thing 1, the 2007 market top or Thing 2, the 2015 market top (that wasn’t). What it has in common with the more dangerous thing (1) is that it had declined relentlessly into the correction. Notice how it ground higher into the 2015 false top.
We have also followed a process whereby the moves in the VIX mirrored those in the inverse stock market as players became almost instantly anxious about the correction that began in February. The correlation slackened and even had a short period where it appeared that the bull frogs were getting too complacent (set to slow boil) about the market relative to its price. So far that view is incorrect insofar as it would project danger for the market. But in and of itself, it is not a healthy thing for players to be so calm.
Finally, another view of the 2015 top (that wasn’t) as it relates to the current situation. We have for probably a couple of months now been holding open the possibility of a top retest (this scenario gained momentum when SPX broke above the green trend line last week), per this weekly chart. The VIX at bottom once again highlights what is not in place today relative to what was in place at the 2016 lows; namely an elevated VIX.
Just a few points of reference for your consideration.
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