With the S&P 500 flirting with 1400, our levels indicate that it’s about time for a sell off in US equities.
The CBOE Volatility Index, better known as the VIX, measures just how volatile the stock market can be. The lower the number, the less volatility and swinging around there is. Currently, the VIX is hovering around 15. This is an extremely low and important number. Over the last five years, whenever the VIX was between 14-15, the market sold off stocks and did so aggressively.
According to our current quantitative levels, the next immediate-term sell level for the S&P 500 is at 1406. The line of support is currently at 1375. If we snap 1375, we’re in for a bumpy ride. We’ll be ready to short when our volume and volatility signals say so. For now, keep a close eye on the VIX and S&P 500 correlation.
For reference, please take note of this video from back in April when Hedgeye CEO Keith McCullough appeared on CNBC’s Fast Money discussing the VIX/S&P 500 trade.