Persistent Complacency?
When will markets bottom? I get asked this question several times a day, and my response is usually when you stop asking me that it will start the process. The chart below of the VIX suggests that even at these elevated levels there may still be too much of a sense of security. I hear smugness when charting the VIX as I hear it’s just silly, but any instruments that trade are fractal and can be analyzed in my opinion. Notice first how the very round 20 number found bounces between February-April, and each time the chart trades into the upper 30s it meets a stiff headwind. Even on its WEEKLY chart, the VIX has the look of rounding out a nice cup base, and dating back to the summer of 2020 on a CLOSING basis 35 was like kryptonite. A move and obviously a CLOSE above 37 could get the whites in the eyes of nervous longs. For those that are in a hole, the old adage applies to “stop digging.” Don’t underestimate the value of doing nothing” comes to mind in this present market climate.