Chart of The Week: Volatility Is Back

With the US stock market hitting its intraday highs here in the morning session, the Volatility Index (VIX) is hitting its intraday low. The SP500 is currently +1.1% at 1035 and the VIX is down -4.3% at 27.46.


That’s the most immediate of immediate term (as in 3 hours) views! It’s also rear-view. Prospectively, you learn a lot from that rear-view data. Despite this morning’s moves, I see three very dominant macro lines to consider:

  1. SP500 immediate term TRADE resistance 1040
  2. US Dollar immediate term TRADE support $76.09
  3. VIX intermediate term TREND support 26.19

Andrew Barber and I chose the VIX as the Chart of The Week, not knowing what this morning would bring – and to some extent, using the 3-factor risk management model of SPX/USD/VIX above, we didn’t really care. Provided that the VIX holds this newly established intermediate term line of support, we know what our strategy will be.


Context here is critical (see chart). The VIX has put on a powerful +20% move in the last 2 weeks. This happened right on time, with US Equities failing to make higher-highs after the critical Outside Reversal day of September 23rd.


From a long term TAIL perspective (red line in the chart below), the VIX is broken. But that line includes the highest VIX readings EVER (not in this chart, Q408). Overall, the point here is to Acknowledge Reality. As the US Dollar makes higher-lows, and the SP500 is making lower-highs, the VIX is breaking out on both an immediate and an intermediate term basis, with no resistance of consequence until it gets closer to 40.


As opposed to where we stood in US Equities for most of Q2/Q3 (buyers of equity weakness), for now we are sellers of US equity strength.



Keith R. McCullough
Chief Executive Officer


Chart of The Week: Volatility Is Back - a1


Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more