Dear VIX Traders,
The S&P 500 closed at another all time high today…
What is weird is this is taking place when the VIX is 24.47
Even more concerning…
The last 40 points have occurred with noticeably rising implied volatility
It is hard not to have the alarm bells ringing when I see the market blowing higher and the VIX running hot at the same time.
This is almost universally bearish in the short term and has led to some of our bigger sell offs.
The last time we saw this price action was in June and Feb before that…
Before that…it was January of 2018.
The point is, that while the market could go higher, the option markets in the S&P 500 are clearly starting to become concerned that movement in the S&P 500 is going to pick up.
Generally, when movement picks up in an index…it is not on bullish price action (although it does happen).
If we see any more of this the traffic light is going to flip to Yellow.
Stay tuned, we could be coming to a market cross roads.
Your Only Option,
Mark Sebastian
