The VIX Continues to Argue that Equities are Vulnerable to Weakness

Here is what we discussed late yesterday: This morning, let's notice that the cash VIX has climbed to an 8-week new high at 16.45, which probably does NOT bode well for the SPX... MJP 12/17/13

What are we supposed to make of the VOLATILITY S&P 500 (VIX) today? The VIX is up slightly, but the S&P 500 Index (SPX) is up 0.7% too!

That is weird, no, especially on such a violent- and strong-upside reversal in the SPX.

Is there a message here? Maybe that the upmove in the SPX should not be trusted? Maybe that ahead of the FOMC, risk and fear will be elevated regardless of what the SPX does?

Who knows the reason. What we do know is that the SPX and the VIX are out of line today.

That said, from a longer-term pattern perspective, doesn't the SPX chart look toppy, while the VIX chart looks like it is bottoming?

The hourly charts go all the way back to the turn on Oct 9. Since that pivotal day, the VIX definitely has not "cooperated" in its inverse relationship with the SPX.

Whether or not we should read much into a divergent two-month relationship remains to be seen.

In any case, it should not be ignored.