In NFTRH 917 we looked at several indications of a frothy and increasingly manic stock stock market. That included a very subdued VIX (volatility index).
However, when viewing the VIX with the SPX we have one of our favored indicators for gauging a condition for a market correction, if not fine tuned timing of one. It is currently a non-signal.
The chart shows SPX corrections that have come after upward divergences by the VIX. This only seems to work reliably during bull market phases, not bear markets or strong corrections like 2022. The indicator foretold the 2022 correction, but then it went to sleep until signaling a routine pullback during a bull phase in 2024.
Currently, there is no divergence, and hence no bear signal in play for this indicator as VIX submarines and SPX climbs northward. It may seem like a small thing, but it is a factor in my book.
