We recently talked about how it’s clear the bulls aren’t ready to roll over just yet, but in this video we tell you what we’re watching to indicate that the bears might be ready to take the reins.
The next thing we talked about as our major landmark to be watching is the CBOE Volatility Index (VIX). The VIX has been trading in a level, and we’re looking for the VIX to rise above 19.5. That is a level that is going to tell us that the market is change, that investors are moving into a range where they want to be a little more cautious.
The VIX has declined a little bit, so it’s coming back down toward support around 15, isntead of up to resistance at 19.5. As long as it stays in this range, the market should be relatively OK. If we do see the VIX break out above 19.5, however, that’s going to be a signal to us that something significant has changed on Wall Street to push us back above that level and that traders are starting to take more protection positions in their portfolio, trying to hedge the long portion of their portfolio against downside risk.
As we look at the VIX, that 19.5 is going to be a key level for us. Now, we would mostly likely see the S&P 500 drop below 1,400 before we saw the VIX climb above 19.5. So, those would be two things we’re looking for in succession to tell us that things are changing and the bears are coming into control on Wall Street.