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The selling in bonds has been encouraging for bullish traders, but I was patiently waiting for the Market Volatility Index (VIX.X) to come off its highest levels. Today we got below the 32 level, suggesting that put buying has finally started to subside.

Market Volatility Index Chart - 60-minute interval

I'm still a little gun shy about getting too bullish on this drop below the 32 level. Back on March 14th we had a similar move below 32, only to be faked out and have the VIX gap up to the 33 level. I am also mildly concerned about the VIX meeting resistance at the 50-peiod moving average, and an oversold stochastic that is trying to turn up. Even with my cynicism, I would rather see the VIX below 32 than above it. VIX below 32, selling in bonds, bottoming patterns starting to show up everywhere, and 99% of the sectors moving higher - things are starting to look up. The only nagging problem is this little blip of red on my screen, the Semiconductor Index (SOX.X).

Jeffrey Canavan
Assistant Analyst

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