VIX has been falling steadily over the past two years – so steadily, in fact, that it has established a very well-formed falling channel that is nicely correlated with SPX’s unrelenting rally.
The VIX futures (VX) chart above shows the sixth major spike running into overhead resistance from both the channel top as well as a trend line from the July lows. Quite simply, if VX can push back above the channel top then equities are in for more trouble. Should VX’s retreat continue, stocks’ meltup isn’t over just yet.
We’ll dig into some of the chart’s nuances after reviewing the rest of today’s charts. Futures are off slightly after a very strong bounce which, again, failed to clear the 50-day moving average.
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