Volatility bulls had a great opportunity last week to score a major victory but came up short in the end. VIX had a decent week, but the inability to hang on to most of the gains resulted in a spike reversal, which, if past is prologue, suggests VIX is headed lower for now.

VIX jumped 4.55 points last week to 18.36, which looks great on the surface, but not when one realizes that the volatility index was up as much as 14.51 points at Friday’s high but only to give most of it back as the session progressed.

When it was all said and done, VIX experienced a massive spike reversal at an important juncture.

VIX’s all-time high was registered in October 2008 when it ticked 89.53 intraday, with the second highest (85.47) recorded in March 2020 and the third (65.73) this August. Shortly after the March 2020 high, several rally attempts have been capped by a falling trendline. If Friday’s high held, it would have comfortably taken out that resistance. Concurrently, from early September this year, VIX has had difficulty rallying past 23-24. This remains the case, notwithstanding last Wednesday’s one-day surge.

The daily is itching to unwind its overbought condition. Besides the 50- and 200-day moving averages at 17.09 and 16.03 respectively, there is decent support at 15.

More By This Author:

CoT - Peek Into Future Through Futures; How Hedge Funds Are Positioned
S&P 500 On Pace For Back-To-Back 20%-Plus Gains
CoT And The Future Thru Futures: What We're Gleaning From The Latest Report