Volatility hit an all-time ‘catastrophic high’ of 89.53 in October of 2008, as shown on the following monthly chart of the .
On Friday, the VIX hit an ‘extreme high’ of 54.39 before retreating to close at a ‘frothy high’ of 41.94.
Activity above 30.00 (‘frothy’) is unusual and has been, historically, short-lived, except during and in the aftermath of the global 2008/09 financial crisis.
The question is, is the ‘extreme high’ volatility of February and the first week of March going to be short-lived, or is it forecasting a longer-lasting period of equity weakness, perhaps into the summer, or even for the rest of the year?
SPX/VIX Daily Chart
For possible clues on SPX direction in the near term (and from quarter to quarter for the remainder of the year), here’s what I’ll be monitoring:
- The ratio moving averages are about to form another bearish moving average…