Implied volatility came screaming off as the stock market rallied on Tuesday. The catalyst was a warm and fuzzy feeling flowing from China after the central bank slashed interest rates in an effort to help stem the tide of selling.
But that’s not all. As you know the bottoming process spreads out during 3 days from March 6-9; so that means the whole week will be a big time golden spiral window. Just stay with us, you’ll see. We’ve caught just about every important market turn for the past 16 years.
On Friday, the VIX closed the bullish window dating from early-December, paving the way for new gains in the S&P Index. Elimination of support in the VIX at 12.08 leaves some accounts over-hedged for the prospect for a back up in the S&P 500. This should lead to some more aggressive equity buying today and later this week.