The S&P vs. VIX Relationship Could Prove Instructive on Friday

Heading towards the opening bell on this final day of the week, we always have to be mindful of the likely negative action of the VIX ahead of a weekend, especially when the S&P 500 is entrenched in a bull run, which ensures downside pressure on the VIX on Friday.

That said, the action in the e-SPU after yesterday's sharp upside reversal has not yet confirmed that the decline (correction) off of the July 3 high at 1978.25 is complete.

Until we get confirmation, we need to watch the VIX for clues that underlying investor/trader psychology has shifted, or is in the process of shifting.

From a near-term pattern perspective, the e-SPU must hurdle and sustain above key resistance between 1963.50 and 1968.25 to confirm that a correction has ended, and that a new upleg is in progress, that should test the all-time high.

Otherwise, my suspicion is that the mini-base carved-out in the ProShares Ultra VIX Short-Term Fut ETF (UVXY) during the past week is "warning us" that the market is exhausted.

Today's action in the VIX could be telling.