CHART OF THE DAY: No Need to Worry About Volatility?

Using the most basic definition of US Equity Market Volatility, let’s think about what just happened with the VIX: 

1. Only 3 trading days ago the VIX had -180,390 net SHORT contracts
2. That net SHORT position in “I don’t need to worry about volatility” was a 3 YEAR HIGH
3. And 3 trading days later, the VIX has broken out from Bearish to Bullish @Hedgeye TREND 

Part 3 of that pattern of market conflict is what I call a Phase Transition. I, of course, didn’t invent Phase Transitions – nature did. Every complex and non-linear system has those. Timing them is not easy.