There are currently a number of factors affecting the CBOE’s Volatility Index ($VIX), most notably the upcoming Presidential Election and the fears of market volatility that a contested election might foist upon the stock market. But there is another element that is affecting $VIX, and it is not getting much press. Specifically, it is the after-effect of an initial bear market “shock” on $VIX.
Join Larry McMillan as he discusses the current state of the stock market on Monday, September 28th, 2020.
The market is in a stair-step pattern lower. This is a relatively orderly decline, compared to the "smashes," if not "crashes," of Feb 2018, Oct 2018, Dec 2018 and March 2020. But the bears are in charge now that the 3280 level has been broken.
Join Larry McMillan as he discusses the current state of the stock market on Monday, September 21st, 2020.
A significant battle has developed between the bulls and the bears. There is resistnace at 2425 and support at 3310-3330. A closing price breakout from that range should be significant, especially on a close below 3280. Unless there is such a breakdown, the $SPX chart can still be considered to be bullish.
Given the current market climate and uncertainty surrounding the upcoming presedential election, it makes sense to consider hedging your portfolio. The following free articles from our archives can help you learn more about portfolio protection with options.
Join Larry McMillan as he discusses the current state of the stock market on Monday, September 14th, 2020.
Join Lawrence G. McMillan to learn why certain option data is useful in helping predict broad market movements. Larry McMillan will discuss the current state of those indicators. He will share why put-call ratios are powerful, contrary indicators with a good track record of market prediction. He will also discuss why volatility derivatives and indices are useful, especially in determining extreme oversold conditions and buying opportunities, and also in discerning the trend of the broad stock market. Lastly, Larry will touch on the current state of market breadth and how it relates to market prediction as well.
The selling that began on September 3rd has gained momentum, and as the market has declined, confirmed sell signals have been registered in several areas. There is one major roadblock for the bears, though, and that is that the chart of $SPX is still in an uptrend. In my opinion the support at 3280 is the one that needs to hold. If it doesn't, then the $SPX chart will have succumbed to a bearish pattern.
This year has been a wild and crazy year in many respects – probably nowhere more than in volatility. That has manifested itself in the trading of $VIX. Over the years, we have sometimes described the seasonality of $VIX. As it turns out, it often follows a very similar pattern (although not completely this year). Moreover, in election years, the pattern is altered in a way that is, perhaps, developing this year as well.
