VVIX/VIX suggests growing possibility of a market crash One to watch in the coming days...
In the past a break down of these VVIX/VIX trendlines is generally followed by a market crash.
VIX measures the short-term volatility of the S&P 500 index, whilst VVIX measures the volatility of the price of the VIX. In other words, VVIX is a measure of the volatility of the S&P 500 index and alludes to how quickly market sentiment changes.
A closer view of VVIX/VIX correlation since 2020 crash - I will grow more concerned below the October 2021 double bottom at 4.66
This recent downturn has been fueled by the new covid variant Omnicron, but also more recently by the FED's comments about increasing the pace of tapering. The latter poses longer lasting risks to the markets.
On the flip side - percentage of stocks below 20-day average metrics are at extreme oversold levels and it is not unreasonable to expect a relief rally here - but the real questions are how long this lasts, how the longer average metrics develop, and how VVIX/VIX correlation plays out over the coming days