VIX Daily Chart Bear Trap Review

 

 

This VIX daily chart goes back about 2 years and represents when investors get panic attacks. It is more related to the SP500 index, and when the VIX price is low, it also tells us that stock investors are extremely complacent. The VIX has seen record lows again as it seems that the $11-$12 price level is a pretty tough line to go below, or stay below.  

We have many VIX H&S  patterns, and when they are at a major bottom, then these H&S patterns can be very bullish for the fear levels.  This can make the VIX a perfect bear trap, and when it shoots up then we know stocks will start to head back down.  The VIX has already started to rise, so all this needs is to continue, or not make another new record low. 

The hype that the mainstream is telling us, make it sound like this stock mania will go on forever, but that would mean that the VIX would have to keep heading south, and head to below zero.  We know that’s not going to happen, which leaves only one option for this VIX, and that is to head up sooner than we think. 

The bottom trend line and the top declining trend line, squeeze the VIX, like a wedge pattern.  Of course the emotional investors never look at the VIX, as chasing a bull market is more important.  For the contrarians, the VIX is very important as it can trigger stock buying and selling situations. 

Much of this may not mean much to investors, but at the COT level, it is a different ball game. Commercial traders have been in a net long position with the VIX for a long time already, but last week they added yet another 6,671 contracts to their long  positions.

On the flip side of this equation are those that just speculate, which tells us how much more complacent they expect the markets to become. The speculators are short the VIX under a 2:1 ratio.  Both parties cannot be right, so a bear trap is close at hand in snapping shut. 

How high the VIX can go is never certain, but when a spike to the upside forms again, then chances are good we will be in another VIX bull trap. 

On Friday many stock indexes have already started to roll over, so it is just a matter of time before the public starts to notice it.