Another bullish day with the VIX cratering to a mid day low of 11.70 before recovering to close at 12.30.
If you don't follow the VIX you're overlooking one of the most highly regarded (and highly trading) vehicles for gauging market support and resistance levels.
Below are the daily and weekly charts of the VIX for 130 bars and it should be immediately apparent how overbought the markets are.
I've inserted the RSI 3 indicator on the VIX charts and the value at today's close was 10, yes 10.....on a scale of 0-100 so there's basically only one likely direction we can go from here.On the weekly chart the RSI 3 is still at 29 but the odds are now with the bears.
Also note the position of the TrendX in the right panel. Yup....we back at overhead resistance.
This presents an interesting dilemma since all momentum signals are bullish but the technicals are screaming "be careful, this can't last".
Today's closing action suggests that a few folks are scaling back positions in order to preserve the recent runup gains.