The final reading for VIX Mix at Friday’s close is shown below. We had many sources of potential blame - lousy consumer sentiment, punky service sector PMI, and a large options expiration among them. Whatever the mix of causes, investors dragged stocks lower and our volatility composite dropped more than 24 points to land back in bearish territory.
Looking at the chart of daily values adds some perspective. First, we see that the recent high in the S&P 500 (SPX) lacked the support of a bullish reading for the VIX Mix in contrast to highs reached back in early December. In fact, this was the second time we saw a new high for SPX while VIX Mix failed to go green. SPX pulled back after the high in January. Buying the bearish VIX Mix reading that followed would have been a winner. But you need only look at December to see that bearish can remain bearish for more than a day or two.
I’m posting this Sunday morning without the benefit of knowing how the futures will open later this evening. I have no idea how markets will fare tomorrow, but you can’t be surprised if VIX Mix remains in the red.
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