December, 31, 2017 Year End VIX Update

A year end look at the VIX can give us some insight as to what is going to happen in the next 3-4 years. The VIX peak on your top left matches what I have is the Intermediate degree wave 4 top. What followed this VIX top was a long drawn out decline, with many counter rallies, that all ended with  vertical spikes. A person would be hard pressed to find any clean set of impulse waves during this decline,  except for very small degree level sequences.

What it boils down to is that anything with the VIX are all diagonal wave structures. Our “Little Blue Book” only shows what they call an “ending diagonal”. The fact is, these so called, “Ending Diagonal 5th Waves”,  can and do extend dramatically, far beyond what they ever show us in the EWP book. In the book they also show us pretty idealized charts, all subdividing into nice even wave structures. The simple truth is that you will “Never” find these pretty wave structures, because nothing in the markets is ever even.

What the VIX really shows us is a declining market with a potential wedge like pattern. For the last 3-4  months the VIX is setting up a massive base just below the $9 price level.  The two previous upward spikes came to a screeching halt, at the top trend line, before heading south again.  This base is now the lowest since the last major low in December of 1993, 24 years ago.

With the bottom base line being flat, the VIX bears are getting squeezed into a box. These boxes or uneven triangles can produce wild upward thrusts, that shock  us when they do happen. We will get a surprise if we choose to ignore these VIX bear trap situations.

The first peak we have to beat is the $21 price level, and then the $30 price level. Technically speaking, the VIX should exceed or retrace this entire VIX bear market, so hang onto your hats folks, as the VIX winds are going to start blowing to the northeast, sending stock markets southeast.

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