Tuesday, December 6, 2011

VIX Daily Chart

The Vix daily chart above shows a bullish cross on the stochastic indicator. The Vix is a fear gage of the market and prices are read in terms of percentage. Readings below 30% is suggestive that complacency rules the market.  Higher readings create panic among investors as they quickly rush to sell their positions in the cash markets. Today revealed a hanging man candlestick, which is identified as a reversal candlestick when at the bottom of a move. Prices have reacted with buying pressure at the support trendline for several days now. Lastly, the Vix and the SPX closed in positive territory today which is unusual, and investors should take heed to this alarming scenario. As a general rule, the Vix is inversely correlated with the equites market, largely the SPX. Now the question is which one, the VIX or the SPX will prove to be correct?

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