Intraday Market Thoughts

VVIX VIX Inflection

by Ashraf Laidi
Apr 29, 2022 12:52

What's the point of using fancy indicators ratios such as the VVIX/VIX ratio, when you can simply use the VIX, or the S&P itself? You know that I'm a fan of using the VVIX/VIX ratio in helping me spot inflection points in indices, particularly the S&P500 index. Here's an instructional video on using the VVIX/VIX ratio. Two days ago, I sent the below chart below to our WhatsApp Broadcast Group, in pointing out that stabilizing bearishness in indices will transition to gradual upside ahead. 

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VVIX VIX Inflection - Vvix Vix Apr 27 2022 (Chart 1)

As the WhatsApp snapshot shows, the idea is to observe the higher lows in the VVIX/VIX index. This means the VVF low from this week is higher than the VVE low of mid-March. This is similar to the lows in March and May of 2021, when VVB and VVD coincided with crucial bottoms in LowB and LowD respectively. 

For a detailed overview on how to use the VVIX/VIX, watch this video.

Tying the fundamental rationale to the aforementioned thesis, could be supported by Beijing's latest vow to stimulate the economy ahead of May Day Holiday, a dovish 50-bp rate hike from the Fed and propagation of forward-looking optimism by Apple and Meta Platforms.

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VVIX VIX Inflection - Whatsapp Vvix Apr 28 2022 (Chart 2)



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