VIX, Volatility, VXX and the Market Melt-Up

 

On February 15 Volatility Sentiment had dropped to just 5%

The last time it hit such a level of near-total complacency was just before the 15% market plunge which began in July of 2015.

As of early February 2017 the Investment Intelligence Advisors' Survey had registered a bullish percentage that shows the highest level of optimism in 30 years. 

The last time this reading was higher was in 1987 a few months before the major market crash that year.

Since early February of 2016 there have only been three days we'd call "material down days" (200 points or more drop in the DJIA), and two of those days were in succession back in June which were immediately reversed.

The last such day was in early September, over 5 months ago, and the DJIA is almost 2700 points (15%) higher since then.

Here's a look at the Shiller 10-year price/earnings ratio as of late January 2017.  The implications are self-evident and ominous.

Against this background of bullish mania and lack of caution we find the VIX flat over the past three weeks despite major indexes rocketing higher.

Today we see VXX breaking a down trend stretching back to early November.

 

 

 

 

 



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