For the second day running, the VIX significantly declined. The VIX opened a touch lower - even with indexes similarly lower, and declined across the day, closing -12.7% @ 14.73 The last six trading days have all seen very dynamic moves in the VIX.
So, the first six weeks of the year were dead in VIX land..yet the last 6 trading sessions have been pretty wild. We've seen three massive spikes higher, and three significant daily declines.
It is very difficult to call tomorrow. It will be largely dependent on whether we can break the previous daily cycle highs of sp'1530. The Dow has already broken that equivalent level, but thats just one index.
On any basis, VIX 'insurance' in the 14s is a pretty reasonable level...but not if the sp breaks >1530.
I am sitting on the sidelines...how we trade in the opening 30 minutes of tomorrow will be VERY illuminating.
If I see a red reversal candle on the VIX - like the one on Monday morning, AND if the sp stays <1522, I'll do a major index re-short.
Otherwise, from a bearish perspective, its a case of sitting back until mid-March..with sp'1550/70s.
more later...on the indexes.