Volatility Bid

This isn't a brand new discovery, it has been creeping up over the last several days.

Last night in our little look back, one of the posts showed the call of the absolute top of the VIX which had made a high not seen since December 2011 as the market came down and the Dow lost 1200 points in 3 weeks (remember the VIX moves opposite the market).

We had a sell signal on our custom DeMark inspired custom indicator along with divergences to go with it, it looked like this at the time on October 15th (also in last night's Daily Wrap)...

"VIX bearish shooting star close after a bearish Harami Monday/Tuesday."

In addition to the candlestick bearish sell signal or reversal, our custom indicator fired off a sell as well...

 Daily VIX sell signal at the bottom of the October decline...

As I mentioned, there have been recent VIX futures positive divergences getting stronger, we also have some bullish buy signals on the 60 min VIX chart using the same indicator as above.

The two buy signals are both at bottom ends of a small range as the VIX has largely been ignoring the moves in equities the last several days, excluding yesterday. Also note the pinching Bollinger bands, indicative of a highly directional move, in this case with buy signals, I'd expect an upside breakout, again remember the VIX trades opposite equities/the market.

Other interesting charts include VIX futures themselves (the above is the spot VIX Index)...

 The VIX futures divegrence started on a 15 min chart and within a day moved t the 30 min chart, a larger, stronger divergence/accumulation and the day after moved to the 60 min chart...

VIX futures 60 min chart.

Today on the 5 min chart we have another strong divergence... 

VIX Futures 5 min positive.

I suspect the 5 min chart's action is related to hedging against the F_O_M_C today, however the longer term charts are clearly not F_O_M_C hedging and seems to have larger implications. I'm not a huge fan of trading the VIX related ETFs, but we'll keep an eye on what's going on here, I suspect there are two signals, long and short term that may not be two separate events or reasons, at least not to the degree it appears; in other words, I suspect this is more about 1 larger event than just F_O_M_C hedging.