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    MARKET EDGES

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Inclusive of today’s -1.5% intraday SP500 selloff, we are a long way from anything in the area code of the quantified anxieties associated with the October/November freak-out. Below is one measure of that reality – the Volatility Index (VIX).

Today the VIX is up another +3.8% at $44.43. While this is up +20% from where I was calling this out last week as oversold, I wrote that we could see a “full +27%” run-up in the VIX and nothing will have changed this fundamentally bullish “Trend” of Volatility breaking down. On the margin, this continues to back my case that the US stock market has seen its 3-month cycle low. The SP500 should continue to make higher lows and the VIX lower 3-month cycle highs.

The chart shows two lines:
1. An immediate term overbought line for the VIX at 48.59 (dotted red)
2. An intermediate overhead resistance “Trend” line for the VIX up at 54.33.

If these lines hold, alongside a narrowing TED spread (3mth LIBOR minus 3 mth US Treasuries), we will continue to see a more palatable environment to not have our hard earned dollars locked up in our ZERO interest bearing savings accounts.
KM

Keith R. McCullough
CEO & Chief Investment Officer