There is something important happening on the VIX that I want to point out today ...
Note, that we have a yellow, down slopping resistance line on the VIX chart that goes from June 2010 to April 2011. That resistance line was penetrated to the upside on February 22nd ... the very day that the market started pulling back.
Also note that the VIX has a blue horizontal resistance line, where it is a positive condition if the VIX remains below it.
Here is the dilemma the VIX is in now: On Friday's close, the VIX was below the horizontal support line, so that is a positive. But, at the same time, the VIX is has remained above the sloping yellow line ... and that is a negative.
So, just as we are ready to start another Congressional budget battle this week, the VIX is precariously balanced with a double test possibility. Here are the VIX numbers to watch for today:
1. Today, a close above 17.80 on the VIX would expose the VIX to another spike up, and down action in the market. So, our Washington politicians have to get it right this week, or the market will judge them very harshly.
2. Conversely, a VIX close below 16.24 would be positive for market rallying action and a pat on the back for Congress.