Volatility snaps higher

With the indexes opening lower by around 1.5%, the VIX jumped 10%, and continued to climb for much of the morning. The break into the mid'19s was a very important sign of strength. The next natural target is the big 20 level, and the late July high of VIX'21.


VIX'60min

VIX'daily

Summary

With the indexes putting in a pretty bearish display, the bears needed to see some confirmation, and they certainly saw it from the VIX which closed higher by 13% to close in the high 18s.

Today was a very important signal that volatility is coming back to the market, and that lower levels in the equity indexes are very likely.


Will the VIX explode later this week?

It is very difficult to say, but the potential is there. However, first I think we do need to see at least a significant 'higher low' put in, at least in the low 20s, before we could see anything in the 30s. If the weekly index cycle (lower target) of sp'1325 could be hit (within 1-3 weeks), I'd guess that would equate to a VIX around 27/30. It sure won't be easy to see anything over that.
--

Looking ahead into Wednesday. I'm guessing (or is it a hope?) we might see the indexes again open lower, and see the VIX get stuck at 20/21, before an intra-day pullback.

--
*I remain short, seeking another exit - preferably on a gap lower, in the sp'1400/1395, with VIX 20/21.

more later :)