Volatility Double Bottom
Volatility is primed to rise. A potential double bottom could be shaping up, with a push to the neckline at 56.89 a distinct possibility.
In the short term we could see a move to the 50-day MA as the S&P works on a November low test. If November lows hold in the S&P then I would expect the VIX to retreat to and then below its 200-day MA; creating a seasonal rally which could last into May.
If S&P November lows were to break as support then I would see no difficulty in the VIX cracking through 56.89 and set up another sharp loss scenario for the S&P, with the VIX pushing 80 yet again.
My hunch says November lows will hold for the S&P but I can see the potential for disaster if they didn't.
Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website
In the short term we could see a move to the 50-day MA as the S&P works on a November low test. If November lows hold in the S&P then I would expect the VIX to retreat to and then below its 200-day MA; creating a seasonal rally which could last into May.
If S&P November lows were to break as support then I would see no difficulty in the VIX cracking through 56.89 and set up another sharp loss scenario for the S&P, with the VIX pushing 80 yet again.
My hunch says November lows will hold for the S&P but I can see the potential for disaster if they didn't.
Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website
