Whilst everyone’s attention on Friday was focused on the monthly circus which is the NFP, the VIX on the other hand slipped quietly and almost unnoticed below the 11.00 price point on the daily chart, to close the week at 10.73, its lowest level for many years.
For the last two years, the index has risen and fallen in a catenary pattern testing the 22 to 24 region to the upside, before reversing lower once again, to build an immensely strong platform of technical support in the 12.00 region, which like the resistance area, always held firm, until last week that is, when it was finally been breached with conviction. As a result, the index is now moving ever deeper towards the complacency of single figures, where a major reversal awaits… but not just yet!
Whilst the VIX has breached a key level to the downside, major indices climbed higher last week, breaking out from recent congestion phases, and constructing the next leg in a further phase of bullish momentum, with the NQ and the S & P 500 leading the way. It’s at times like this, that the trading maxim is ‘to trade what you see, and not what you think!’ To much thinking in the current market can be bad for your wealth when it comes to equities, and provided the bullish momentum is fully supported with strong and rising volume on the longer term charts, then the prospect of the VIX moving to single figures becomes ever more likely.
By Anna Coulling