The Volatility Index or the VIX is somewhat useful in navigating the #SP500. Historically, during this inflationary bear market, the VIX has bottomed at SP500 tops and has topped at SP500 bottoms. Now that the VIX is coming up on its typical low for this bear market, will the SP500 get rejected once again? In this video we talk about likely outcomes.
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Hey everyone and thanks for jumping back Into the equity verse Today we’re going to talk about the Volatility index or the vix and how it Can be useful in navigating the S P 500 If you guys like the content make sure You subscribe to the channel give the Video a thumbs up and also check out the Sale on into the cryptoverse premium at Into the cryptiverse.com let’s go ahead And jump in so the last time we spoke About the vix was several months ago Also when it in fact was in a downtrend Coming down to sort of these levels over Here and the general argument that we Put forth was that at least so far Within you know at least over the last Year or so whenever the vix gets to some Of these lower levels it’s getting Pretty close to likely turning back Around now I will say just because the Vix is at 17 doesn’t mean that it can’t Go lower this is the lowest level that It’s really been at since basically the Very beginning of 2022. Um it doesn’t mean that it can’t go Lower and in fact there’s been periods When we were spending a very long period Of time time at volatility levels much Lower than than 17 but if you look at at The trend at least since October of 2017 It’s that the vix has been putting in Higher lows off and on I mean we’ve had Periods where it shoots up note that
These major times where it’s shooting up There’s some you know something big Going on within the within the s p Um you know oftentimes of course it Corresponds when they move to the Downside right like here’s March of 2020 Um and then of course we could go Through the years and maybe we’ll go Ahead and do that but if you if you pull Up the S P 500 and just sort of overlay It right you can see that the blue line Right these major moves the downside Within the S P 500 you’ll see the vix Spiking up and you might have heard People say well you know if if there’s a Massive Spike up in the vix uh you know Say to say 40 or 50 that could Mark sort Of this big event that I I think a lot Of people are sort of counting on but One of the things I think we should Really look at is that Locally what has been going on because I Mean of course there’s some interesting Trends over here what’s been going on Locally one of the things you’ll note is That any time that the vix has gone up Into this say 30 to 35 region uh it has In fact marked Um you know sort of these local bottoms Okay so whenever it has gone up to this Level right up to these levels over here It has generally marked local lows on The S P 500 right you can see this one In here as well uh this move right here
Marked this local bottom on the S P 500 And and even I mean even the short-term Move up to the upside more or less Marked that local bottom on the S P 500 Okay and and you could you could sort of Go back in time and see this in in other Cycles as well Or maybe a different ranges but but also What you’ll see is that these lows have Marked sort of these tops right so Here’s a low that ended up marking that Top and then and that low course Corresponded to around 19 or so this low Right here marked that top on the S P 500 and then this low here marked that Top and then of course we had this low Right here which marked that top right So when when the vix is at a low level Or at least and this is what we talked About you know back in the video that we Did several months ago When it gets to these low levels it Doesn’t mean that that you’re gonna Immediately see the S P 500 You know move back down but it does it Does sort of show that the risk is there For a move back up in the vix and if it If it of course does Um it would be indicative of the S P 500 Moving down Now right now we find ourselves at with A vix of of 17 right so 17.07 to be exact but again this is the Lowest level we’ve seen since really
Going all the way back to to the Beginning of of 2022. so it’s been a Long time since we’ve seen the Volatility Index this low and and now I Do think that we are getting into some Dangerous territory if it’s going to Continue in this range then again the Biggest caveat is that we’ve spent a lot Of time at much lower valuations during A secular bull market in stocks again The other Counterpoint to that though is That it has sort of been on this slow Slightly increasing Um slope or this trend line right slowly Moving up but again the vix has been Putting in higher lows and not only is It out these sort of these lower range That it hasn’t really been at for what 16 months now it’s also corresponding to Sort of this lower rate or this higher These higher lows on the vix that we’ve Seen since sort of the end of of 2017 so I’d be interested to see what happened Comes here with the S P 500 over the Next couple of weeks do note that you Know the last time I think we made a Video on this when when the vix was Pretty low it didn’t necessarily mean That the s p had to turn around Immediately but it wasn’t too much Longer before we did see a you know a a Pretty significant decline in the S P 500 it didn’t mark a new low with the s P but it did it did Mark sort of a
Fairly substantial move back to the Downside so we are getting into some Pretty little low levels here for the Vix once again Um and if if we start to see if we start To see a sort of Spike and the s p come Back in for you know a few days and it Could be indicative of of sort of a Another leg lower on the S P 500 Sometime the next few weeks the other Thing that I I think is interesting to Look at And when I say another leg lower I just Mean Um you know at least a correction not Necessarily an immediate new low but at Least a you know correction back down One thing also to consider is that There’s sort of been this compression Here right like even though the vix has Been putting in sort of these higher Lows and even though it’s been range Bound the upper part has has been Putting in lower highs Um so we haven’t really seen nearly as Much volatility as the year continues to Go on to the upside so I’m somewhat Interested you know this would this Would likely converge at some point you Know by by mid 2024 and I mean of course It probably won’t take until then to see Some type of breakout to the upside or The downside but I imagine that if we Continue to sort of just stay in this
Range like this eventually it’s going to Have to break out to one side or another And if it’s a break to the downside then That would obviously be quite bullish if It’s a break to the up side then it Could it could be the reconciliation of Of all the you know of all the Indicators building up and then the Macroverse saying that you know there’s A recession sort of not now but at some Nebulous point in the future it could be The culmination of that so I do think The vix is is probably worthwhile to Continue to follow if it does move back Up Um do note though that we don’t Necessarily have to expect it to come Back up to the 35 range 30 to 35 range It might only make it up to the 25 to 30 Range before before ultimately coming Back down because again you can see There’s been some sort of compression Here of of the volatility index Essentially since the beginning of 2022 It’s been putting in lower highs Um But it also hasn’t really moved much Further down than where it is today Although today does Mark a new low at Least since January of 2022. thank you Guys for tuning in hopefully this was Interesting make sure you subscribe if You’re not subscribed give the video a Thumbs up and again check out the sale
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