Historical kiss of resistance with a low VIX, taking place in the 500 index right now?

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The decline off of the mid September highs broke support line (1).  The seasonal Thanksgiving rally last week took the 500 to the underside of this support line, now represented as resistance at (2).

At the same time this rally took place, the VIX index stands at 15. Since 2010 when the VIX was at 15, was the market closer to key highs or lows?

With the 500 testing the underside of resistance for the first time since 2009 and the VIX setting at 15, the upcoming price action at (2) becomes very important!

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2 Comments

  1. Hi Chris,

    I’m confused by this chart. When I draw a trendline on the $INX or the SPY, on the monthly, weekly or daily charts, I don’t show price violation of the TL? Also, I’ve observed from time to time that the VIX can certainly drop further or stay sub 15 for prolonged periods. For example, in 08/06 – 02/07 The VIX dropped below 15 and stayed subdued, while the S&P 500 Index gained 15.4%
    Finally, I love your website and the way you interpret patterns. Do you see an identical price pattern developing right now (daily chart) vs the June low with respect to price and its relationship to the 200MA, the MACD and the RSI?
    Thanks in advance,
    Steve Morris

  2. Steve…Thanks for the great comments and questions. The chart you are discussing is the ETF (SPY) on a weekly closing basis. You are spot on that the VIX can remain low for long periods of time. The VIX is very helpful at key lows, pretty much stinks at market highs. As you share it can stay low for long periods while the market keeps going up.

    I appreciate your kind comments. The thing that sticks out to me Steve is that small declines cause people to become very scared/fearful, per many sentiment indicators. Lows in the summer of 2010 & 2011 saw a ton of fear on moderated declines. I would be really concerned about the downside if a 10%-15% decline took place and few became fearful.

    Thanks for the viewership and kind words Steve,
    Chris