You can see from this chart that the VIX weekly has broken out of above 9 and 21 SMA. In past occurrences this has lead to further SPY downside (blue line) in the following weeks. In this case the VIX was leading the SPY with the daily breaking out with 9 day crossing to the upside of 21 SMA even as SPY was achieving ATHs. This curious phenomenon has been explained over the past couple days by multiple $B in tech call option purchases from Soft Bank.
After Fridays rapid drop and vicious (although incomplete) recovery, the VIX fell yet still remained above significant SMAs. It seems that increased SPY downside should be expected in coming weeks. The question is whether or not this downside will come with rising or falling volatility. In past occurrences VIX has fallen with SPY in similar situations, but in recent history VIX breakout has not lead the SPY drop on the daily. I am interested to see how this unique situation plays out. Any input or comments are greatly appreciated.
After Fridays rapid drop and vicious (although incomplete) recovery, the VIX fell yet still remained above significant SMAs. It seems that increased SPY downside should be expected in coming weeks. The question is whether or not this downside will come with rising or falling volatility. In past occurrences VIX has fallen with SPY in similar situations, but in recent history VIX breakout has not lead the SPY drop on the daily. I am interested to see how this unique situation plays out. Any input or comments are greatly appreciated.