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The inverse relationship between volatility (VIX) and the SP500 (SPY) remains a critical one to both observe and manage risk around.

I don’t see today’s abrupt breakdown of the SP500 as surprising. It occurred immediately after the VIX broke out above our immediate term TRADE line of 23.10. Currently, the VIX is testing 24.50 and is breaking out above our most immediate term risk management duration for the 1st time since early August.

In terms of critical lines of SP500 support, there are two: 

  1. TREND (intermediate term) = 1144
  2. TRADE (immediate term) = 1141 

Currently, both of these lines are broken. In conjunction with the VIX breakout, that’s bad.

KM

Keith R. McCullough
Chief Executive Officer

Bear/Bull Battle: SP500 Levels, Refreshed ...  - 1