Friday, December 25, 2015
Volatility (VIX): It's hot out so I'm wearing shorts (only to $17.90)
VIX promises to be quite volatile for 2016 (I myself intend to be arbitrating this volatility with UVXY and SVXY). Long term, VIX has emerged from a very long and steep descending channel (visible in the weekly chart) which should already interest some people. Is an ascedning wave going to go in as part of a larger three wave down structure? Is a bottoming pattern going to develop? I am partial to the second school of thought now that we are in a positive interest rate environment and while fears persisted since 2008 of deflation the market had to appear to be rising which meant VIX had to be falling.This paradigm no longer applies in a post-interest-rate-rise market. Tremendous forces will be wanting to keep VIX low while equally strong forces will forcing a rise in response to what an increasing number of observers are calling a "fundamentally flawed system."
two pink lines) are at $16.42 and $22.82. The upper ATR trend reversal coincides with a breakout of the upper diagonal support.