Fear Index Tests 2007 Support
Chris Kimble | May 10, 2017 10:42AM ET
The chart below looks at the VIX index over the past decade. Over the past three weeks, the VIX has been falling sharply by more than 40%.
Over the past 7 years, the VIX has remained inside of falling channel (1). Line (2) is a parallel line of falling channel (1). The index is now testing the lows of 2007 and line (2) at (3). When the VIX hit this level in 2007, it skyrocketed.
This price level could become a very important level for the VIX and potentially could send an important message to the bullish trend in stocks.
The collapse in fear has been great for ETF XIV, which has rallied over 25% in the past three weeks. Premium and Sector members have been long the XIV trade and are now harvesting gains and pulling up stops. The VIX's collapse has been good news for the anti-fear trade.
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