10/25/2018 11:55 AM
Below is a daily 2-year chart of the S&P 500 index in the top window, the VIX index is in the bottom window.
The CBOE Volatility Index, known by its ticker symbol VIX, is a popular measure of the stock market's expectation of volatility implied by S&P 500 index options, calculated and published by the Chicago Board Options Exchange (CBOE). It is colloquially referred to as the fear index or the fear gauge. (source: Wikipedia)
The good news:
Panic selling has occurred in the past few days, notice the spike in the VIX to the 25 level (blue line in the bottom window)
We saw that spike to 25 or greater in the VIX at the bottom of February and March corrections
From this gauge, perhaps the selling is nearly over
At the time I write this, the S&P500 index is up +41 at 2697.76 – that’s good news -- as we are currently holding above the 2692 support (yellow horizontal line below)
The bad news:
Yesterday the S&P 500 index closed below major support of 2692
That’s a bearish sign, if we fail to hold 2692, the next closing level of support is 2581, the closing low of February 8, 2018, about 4% lower from the current prices
What should you do?
Nothing – that’s a decision to stay the course
Dial down on your equity %
Dial up on your equity % -- or invest idle cash (that’s what I have been doing with my own money)
Call us with any questions – 800-578-3181x0