VIX & Technical Analysis

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I am not one for technical analysis.  I am even less one for technical analysis on the VIX.  TA just simply does not work on the VIX.

Long term, the VIX has an average, a mean.  Stocks and many other assets do NOT have a long term mean.

One might argue some other commodities do, and who knows, they might, but I dont care.  But not in the true sense of mean reversion that the VIX tends to hold too.

That said I know there are enough people watching the VIX, and levels of volatility, that some of the big moving averages can cause selling in the VIX, and almost certainly buying.

Take for instance the price action yesterday, VIX for the 1st time in about 2 months crossed BELOW its 50 day moving average.

After what seemed like endless momentum, the VIX found a bid, on a day the market was selling off no less.

VIX over the last two weeks had been selling off on red SPX days, and firm on SPX green days.

This could be a near term blip back higher for the VIX, perhaps to 50 or greater, that tends to be the pattern in major sell offs.

I still think at some point we will see a lower low than the current low, however VIX might not break 60 or even 55 in that process.  

When that happens I will be buying the market with both hands.  If I am early, it will not be by much. In the meantime I like selling implied volatility(IV) that is out of the money and longer dated.

Currently, I am looking at June or longer, with a delta around 20 or less.

Option Pit Traffic Light: Yellow – Which means VIX could go up or down.

Your Only Option

Mark

PS:   We are still putting out great trades in the Vol Edge, and there are more to come.  We are going to be ending our unique quarterly service offer in the next few days. With my amazing money back guarantee you might as well give it a try.  Sign up here.

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