Market Analysis

$VIX Getting Jiggy

$VIX is building another clean technical pattern. Recall this summer we identified a coming $VIX volatility spike informed by a pattern structure forming.

Since that spike to 24/25 in August $VIX has been forming another pattern. Many of may have seen this pattern in my charts as recently as this weekend in correlation to the the $SPX:

This structure again suggested a spike coming into the upper trend line, but the pattern is incomplete and requires building, but once built it is suggestive of a much larger spike to come.

Note in the past few days $VIX has already become quite jiggy. First with a little inverse build:

Then the inverse triggering and filling its first open gap above:

But today $VIX did a lot to keep working on building its pattern: It tagged the upper trend line again, and, as several times before rejected there today:

Again very respectful of a trend line and the little inverse has played as well. Now as I outlined this summer, $VIX can consolidate and patterns can take their time to build. This pattern has now been building for nearly 2 months.

And look how clean the trend line rejection shows on the previous daily chart:

In context the technical rejection and correlated $SPX bounce make perfect technicals sense.

The pattern is there, and it’s not invalidated. And what is the pattern suggesting if it confirms? A move much higher:

I show confluence resistance near 26/27 a target distance compatible with the pattern size.

For now $VIX is compressing again after today’s trend line tag, but it just got jiggy again recent days and by doing so it again checked off another building block in its pattern formation. The message: Another larger volatility spike is coming. When? When it breaks above the tend line, then a $VIXplosion similar to this summer may be upon markets quickly.


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Categories: Market Analysis

13 replies »

  1. Sven,

    After watching Mr. Vix dump today, Mr. Vix does not seem to understand that China will be less likely to finalize a trade deal due to the Ukraine mess, and now Warren has a higher probability of beating Biden for the Democratic nominatiion. Mr. Vix will have to pay attention to politics as some point…and so will investors. “Sooner than expected trade deal” comments will not work forever, and funny enough every market pop will reduce the likelyhood of a trade deal. Perpetual madness…

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