April 23, 2011

In my previous blog I commented on the VIX (S&P 500 or SPX volatility index) and its downward movement towards very low levels. Since the VIX usually moves in the opposite direction of the SPX, here is what the SPX looks like in various time frames. On the last one I marked some previous tops that the SPX will have to penetrate if it is to continue its upwards march. Keep in mind that as the SPX marches upwards the VIX marches downwards. Naturally, for stock trading, options trading and index trading this information is quite important and useful.

This one is for the past 3 months. Notice that the next hurdle for the SPX to go thru is the 1345 or so level.

This one is the SPX for the past year.

This one is for the past 5 years. Notice the various tops the SPX will have to overcome.  With the VIX so low I think that caution at this point is much warranted.

Cheers,

Erik

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