• 94 days Could Crypto Overtake Traditional Investment?
  • 99 days Americans Still Quitting Jobs At Record Pace
  • 101 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 104 days Is The Dollar Too Strong?
  • 104 days Big Tech Disappoints Investors on Earnings Calls
  • 105 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 107 days China Is Quietly Trying To Distance Itself From Russia
  • 107 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 111 days Crypto Investors Won Big In 2021
  • 111 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 112 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 114 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 115 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 118 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 119 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 119 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 121 days Are NFTs About To Take Over Gaming?
  • 122 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 125 days What’s Causing Inflation In The United States?
  • 126 days Intel Joins Russian Exodus as Chip Shortage Digs In
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

What Is The VIX Fear Index Telling Us Now?

Supply And Demand

When you get down to brass tacks, asset prices are governed by supply and demand. In the markets, the conviction of buyers relative to the conviction of sellers also plays a major role. Therefore, "I am confident" vs. "I am nervous" ratios can help us monitor and manage investment risk. What is the market telling us now?

Confident vs. Nervous

One confident vs. nervous ratio, the S&P 500 relative to the VIX, is shown below. When the ratio was pushed back at resistance (see point A), weakness in stocks followed (bottom of chart). Conversely, when the ratio cleared resistance (point B), good things happened in the stock market. Last Friday (before the FED), the ratio was revisiting the horizontal blue line, meaning it was at a possible inflection point (see point C).

$SPX:$VIX S&P 500/Volatility (New) INDX

Support Is Holding In Bullish Manner

As of Thursday, September 18, the ratio was bouncing in favor of the economic and stock market bulls. When the ratio is above the blue horizontal lines, bullish odds are more favorable. Our concerns would increase if support is broken near point C. On a weekly chart, Friday's close is much more important than Thursday's. Therefore, we will be monitoring the look of the chart over the next few days.

$SPX:$VIX S&P 500/Volatility (New) INDX

Investment Implications - The Weight Of The Evidence

On September 16, we asked is a big move coming soon in stocks? Subsequently, the S&P 500 cleared short-term resistance, which improved the odds of a rally taking place this week. The evidence, including the S&P-to-VIX ratio, has improved this week. With an improving risk-reward profile, our market model called for a chess move on September 18 (see tweet below).

Ciovacco Tweet: CCM Market Model

The S&P 500 is up 25 points this week as of Thursday's close. Friday brings a very light economic calendar. If the improvement in the evidence holds into the weekend, our model will most likely call for another "add" to the equity side of our portfolios. We will head into Friday's session with an open and flexible mind.


Back to homepage

Leave a comment

Leave a comment