Why I'm Watching The VIX Closely Now
Alan Bradley | Nov 25, 2015 12:02AM ET
While the TICK is showing there is already at least one holiday auto-float program on the market, it may be a couple of days early to sit back and know that the market will do its magic holiday slow float up into Christmas.
Studying the VIX closely helps to determine if an assumed upcoming market action is actually starting. Taking a look at the two charts of the VIX shown below, the chart on the left is the Daily chart of large key moving averages, where we see that the VIX jumped quickly from the EMA lay-up that happened mid month.
Now we see the same two EMAs trying to setup for another VIX jump higher. Currently, they are neutrally compressed but the bulls need to see the red line cross down through the larger green EMA before they can kick back and start thinking about holiday eggnog.
If the red line starts to lift up from the green there could be problems.
Looking at the right-hand chart, a 120 minute bar chart of the VIX, we see that it continues its slow creep upward in its red channel and it's getting very close to the make-or-break downhill blue channel. It's likely that the situation will not be allowed to be resolved either way until at least Monday because the powers that be do not want the chance of any market negativity when consumers are opening up their wallets to commence holiday shopping.
Maybe by the end of next week we will know if the sleigh ride into the rest of the year is on or if investors will develop a bad case of indigestion.
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