Technical Analysis and the VIX?

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While I do not believe in ‘technical analysis’ on the VIX.  

That doesn’t mean that there cannot be brushes of tech in VIX trading.

Let’s take the trading this week so far.  Between Thursday’s open and Monday’s close, the VIX got torched in a way that I have rarely seen:

So after opening down AGAIN on Tuesday, I have to say it could be that the VIX was the dog wagging the market’s tail.

Risk came on too strong too fast.  The smart money decided to hedge, driving up demand for puts and driving up demand for short futures.

So how do you spot an oversold or overbought vol market?  Unfortunately, moving averages and that type of analysis does not tend to work.  

Volatility, for how analytical it is, has some nuance and takes years of experience to get right.  Spotting an oversold or overbought VIX is one of those things that takes years of trading to spot with consistency.

That is part of the reason I can send you my traffic light every day.  It’s the stuff we add at Option Pit that turns this light into something game changing.  

It’s not like the VIX blew up today.

It could be that despite the great earnings from last night, the S&P 500 might churn and the VIX is probably not going to run below 30 this week.

The VIX is still in contango, running under both May and June.  I would like to see May dip below June to feel really comfortable with this market.

The VIX Traffic light remains RED, albeit a weak red light.

Your Only Option,


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