Quick Look At The VIX

Today the stock markets took a big hit, and the VIX soared. The VIX is in a vertical position right now, which usually precedes a correction or a reversal. Once we check the top trend line on the daily VIX chart, we can see that the VIX is pointing to the $14-$15 price range where strong resistance can come from.

We also have two open gaps well below todays VIX prices. It doesn’t necessarily mean that these two gaps, have to get filled on the next trip down, but there is a good chance that the $10.20 gap could get filled.  Any short small correction could happen, then this bullish phase will develop another leg up.

The commercials have had net long positions for a long time while those speculators have been betting on much lower VIX lows.  I’m sure you will read other analysts that report the trader’s positions, but they always tell you what the speculators are doing. The commercials were on the right side while the speculators got themselves into a bear trap! Following a group of traders that consistently trap themselves is not exactly my idea of the smart thing to do.

When the commercials become net short again, then I can see a big reversal with the VIX.