VVIX/VIX OVERBOUGHT ON THE 1 DAY! TREND REVERSAL APPROACHING?
- VVIX/VIX, 1DAY: The VVIX / VIX aka "The Vol of Vol", is essentially the historical volatility of the VIX , in relation to its own recent history as represented by the VVIX and over the current volatility of options on the SPX as measured by the VIX. It is a way of measuring current volatility against a second order measure of volatility gauging the "rate of change of the rate of change". We can also use VVIX/VIX to gauge the current volatility against its relative history and when the VIX (denominator) gets too low in relation to its relative history as represented by the VVIX in the numerator, we can see this relationship emerge on our RSI. The 1 DAY RSI on the VVIX/ VIX has been a YTD predictor of tops and bottoms. It has recently recached an overbought reading on the RSI as illustrated above. We also see that signal has yet to breach the 0.5 EXT on our Fibs giving a confluence of indications that a VVIX/VIX trend reversal (volatility increase )could be forthcoming. Please take a look at our #SPX analysis in the link below to see where this trend reversal might end up. Buckle up, be agile and stay liquid out there!
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