(2/18/17)
Typically there has been a strong correlation between the VIX
and the S&P 500. Going back to the 1ate 1990's when the VIX has risen
5% or more the S&P 500 has been down 94% of the time with an average loss of
18 points.
Meanwhile if we look at those days when the VIX is up 10% or
more the S&P 500 is down 99.4% of the time with an average loss of 27
points. This past Wednesday the VIX rose 12% however the S&P 500 was
up nearly 12 points. As you can see below there has only been two other
occurrences since 1998 where the VIX has risen 10% or more and the S&P 500
finished positive. Both of these prior events were in June of 2015.
Thus we have now seen three of these occurrences in the past 20
months.
As mentioned above the last time the VIX was up 10% and the
S&P 500 closed higher was in mid June of 2015 (point A). This signaled
a topping process and an eventual 13% correction in the S&P 500. Thus
we shall see how things play out this time around.
Amateur Investors
|