This is the longer term chart of VIX. The first spike is the October 2008 low in equity markets. The second spike is the August 2011 low. If someone showed me this chart and asked me to guess where S&P500 would be last August, my totally wrong answer would have been "gee,that looks like 666 bottom on S&P500."
Closer look reveals that VIX made a lower low and investors appear getting sanguine. Judging by it, S&P500 should have been or must close above 1,285, its October 26 swing high. But so far it has not! One of them is wrong. Soon we will find out if it is VIX again. But if so, is VIX losing its importance as a confirmation signal?
On the other hand, Merrill Lynch US High Yield index seems to be a good advance indicator on S&P500 these days. I posted this chart back in early November when I highlighted the divergence and argued for the downside breakout from the Pennant.
Currently, both S&P500 and the credit index seem to confirm each other.
Closer look reveals that VIX made a lower low and investors appear getting sanguine. Judging by it, S&P500 should have been or must close above 1,285, its October 26 swing high. But so far it has not! One of them is wrong. Soon we will find out if it is VIX again. But if so, is VIX losing its importance as a confirmation signal?
On the other hand, Merrill Lynch US High Yield index seems to be a good advance indicator on S&P500 these days. I posted this chart back in early November when I highlighted the divergence and argued for the downside breakout from the Pennant.
Currently, both S&P500 and the credit index seem to confirm each other.
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