VIX’s Warning

The death cross is one of those tried and true technical indicators that often portends big drops.  When a stock’s 50-DMA drops below its 200-DMA, it tends to drop like a rock (unless it’s FB, which uses such crosses to time its buyback announcements.)

I thought it’d be interesting to look at VIX, which has had such an important impact on stocks — especially over the last two years. Previous death crosses (when it’s 50-DMA rises above its 200-DMA) are marked with a yellow arrow, and it’s pretty clear that they have predictably indicated big spikes in VIX — and, big drops in SPX.It’s interesting, then, that as of yesterday’s close the 50-DMA and 200-DMA were both at 15.97.  This morning, the 50-DMA ticked slightly higher — making this the most bearish chart I know of.continued for members


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