VIX, VIX ETFs Fall Close To Major Support (VXX, XIV, TVIX)

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VIX, the CBOE Volatility Index, also known as “the fear index,” dropped 3% today and now approaches major support levels in an oversold condition.

chart courtesy of http://www.stockcharts.com

Major VIX ETFs decline again today as volatility and fear leave the marketplace:

iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX): -3.1%

VelocityShares Daily Inverse VIX Short Term ETN (NYSEARCA:XIV) -2.9%

VelocityShares Daily 2x VIX Short Term ETN (NYSEARCA:TVIX) -5.7%

Looking at the chart of VIX above (NYSEARCA:VXX) we see that RSI is in the oversold region near 30, a level from which major turns typically take place and this would indicate higher VIX prices/lower stock prices ahead.

We also notice that the price is currently 17.98 which is approaching 15 which is a major, multi-year support level that hasn’t been breached since late 2007, way back in the good old days before this seemingly never ending financial crisis began.

Bottom line:  VIX and VIX ETFs (NYSEARCA:VXX) are commonly viewed as predictive indicators of stock price moves.  When VIX declines, stock prices tend to rise and when VIX rises, stock prices tend to fall.  Today VIX is nearing oversold levels and significant lows which could indicate that the next most probable directional move would be up which would indicate the potential for rising VIX, rising “fear” and declining stock prices.

 

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