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The VIX is in Decline

By Steven Smith

 About this article:
 As I mentioned in this morning's opening post, the VIX had declined below its 10 day moving average (MA) but the S&P 500 Index had failed to make a higher high, which threatened the legitimacy of the recent uptrend. A reader asked whether my interpretation of the decline in the VIX has changed since my May 13 post. The pertinent parts of that post include data from Sentiment Trader . "Since 1990, when the VIX hit a six-month low, while the S&P 500, on which the VIX is based, was still at least 1% below its own three-month high ... returns in the S&P 500 going forward were substandard (and negative) going out as far as two months. From one to 10 days out, the S&P was positive less than 45% of the time, and showed an average return that varied between -0.1% and -0.8%. In...

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