I’ve opened up this premium subscriber update posted yesterday as the market was dropping, the news cycle was ramming it home and the VIX was spiking 29%. We remained calm and collected because we had sound information on our side, not hysterics and cacophony. Check out the post for the S&P 500’s key short-term support.
The main points were that a) the market had not broken the support parameters we’d laid out ahead of the pullback and b) the spiking VIX is often an ally to the bulls, not an adversary. The sleepy VIX had been slow boiling the comfy bull frogs, making them susceptible to events like yesterday’s negative hype fest.
Stocks are correcting with the media bull horn letting everybody know how bad it is out there. VIX is spiking and while this could be the beginning of a rally failure, the trend is still with the bulls in the near-term. What’s more, the fast asleep VIX had been a bear ally as it is a condition for a correction. But if this proves to be a pullback within an ongoing rally the VIX spike would prove a sentiment refresher.
All today is doing is erasing that sentiment event. The market is now a candidate to resume its rally since support was soundly tested and a lot of people puked. But last week’s highs would need to get taken out to confirm that. Oh and the VIX is down 12% as rattled nerves settle down.
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