Volatility is a tricky asset class. At least for me. I’m sure quantitative methodologies utilizing various derivatives make it easier for the more mathematically inclined, but I do with what I got. Chart interpretation is definitely more art than science, and I wanted to share what could be a set-up for a short-term burst in risk-off sentiment.
We’re only two weeks removed from that spike in fear that got everyone’s under-garments in a bunch. Since April, the last 4 times the VIX spiked up resulted in intra-week advances but never closing a week above that top channel line.
Price action across all markets says to me that there is a lot of FOMO and confusion, as evidenced by declining or negative breadth and sentiment readings with new highs across various asset classes.
In order for a proper selloff across multiple asset classes, I’d like to see the VIX close out the week above 20. Not a bear here. Just positioned accordingly for some short-term profit should things soon get a little sparky for a minute.