If the VIX were a stock

Email from subscriber DM:

“Gary – do you mind charting out vix as if it was a stock in a future post or weekly?”

Why no sir, not at all (after I spaced out on including it in NFTRH 718 despite a note right in front of me on my desk).

If VIX were a stock…

…it would be bearish and while maybe a bargain bottom feed, and technically breaking down from a bottoming stance. To me this is just another sign of the emboldening FOMOs and MOMOs, but I was asked to view VIX as a stock and so I will by daily and weekly charts.

VIX daily has broken below the lower trend line after taking out the important moving averages, especially the SMA 200, which is the major daily trend marker. RSI and MACD are negative and as with the ‘price’ of the VIX, robotic – as opposed to impulsive – in their trends. This morning’s futures imply a pop in the VIX today but it needs to take out 22 with authority to even consider getting back on its bullish track (and likely, a bearish one for the stock market).

VIX weekly shows a broken bowl, which had license to hold and continue a new uptrend after filling the 2020 crash gap. This is what the FOMOs have done. The dumb money. But at some point dumb can become smart. I’ve seen it before where seeming stupidity has led to big bullish outcomes. But then again, maybe those two concepts are related. Stoopid and bullish.

I digressed again, but let’s just say that at this time the VIX – viewed as a stock – has technically aborted its 2022 uptrend. The daily SMA 200 is still sloping upward and VIX needs to take that back and paint this breakdown as little more than a sign of the sentiment relief rally that the stock market was due for; a rally pushing our extreme upside targets.

If VIX were a stock I would not be buying it. But as a risk manager, I’d consider it.

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This Post Has 9 Comments

  1. Mike Melamerson

    consider that level 16 for VIX is normal

    1. Gary

      Good point, Mike. I see what you mean. So I guess it is logical that VIX would go back to ‘normal’ during such a sentiment relief rally.

      1. Mike Melamerson

        scaling into VIX long positions as it floats down

        1. Gary

          What vehicle?

          1. Mike Melamerson

            vix and uvxy vertical call spreads Sept/Oct

            VIXY etf

  2. MikeC

    Seems at least the main bearish site I read, Slope, has many bears in a depression.

    That, to me, would seem also to be a contrarian signal. Am I getting it right? Suck all the FOMO people in, and get all the bears to capitulate, and we gotta be near some near term top.

    Cash is feeling pretty comfortable right now.

    1. Gary

      That is certainly a viable path.

  3. MikeC

    I say this with tongue firmly in cheek and no disrespect. Bowl? And the gap is the starting point area? Is this from a book? I can draw a nice bowl on the Vix from 2009 to now as well. What does that mean?

    Sorry, after looking at TA for the past 6 months, I can see how certain moving averages act like magnets to prices, because they are straightforward math calculations anyone can do exactly the same.

    But drawing trendlines, flags, bowls, etc. is so subjective I might as well be casting bones on the ground and divining the next market move!


    1. Gary

      LOL, he asked me to do VIX as if it were a stock.

Comments are closed.