In our analog from Feb 6, today was slated as the day that VIX collapses sharply in order to get SPX just a little higher before a pause. But, as we noted last week, VIX broke down 6 days early and hasn’t as much firepower left.
And, stocks have run into resistance so strong that it would take some pretty powerful assistance to get them any higher.
In early January, WTI broke out of a rising channel and made multi-year highs, enabling ES to break out of the rising channel it established in the wake of the US election (below, in white.)
ES fell back into the channel during the February correction and, despite making a strong comeback, has failed in five separate attempts to break out again.
Needless to say, we don’t have the exact same set of political and economic issues which were making headlines over a decade ago. But, on the other hand, stocks are significantly more sensitive to VIX’s every twitch.
With ES, SPX and RUT bumping up against strong resistance, does VIX have enough juice? Don’t look now, but it’s creeping higher and our yield curve model is hinting at serious trouble ahead.
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