Nasdaq & Dow have been moving like crazy the last few sessions

Key Concepts

• VIX (CBOE Volatility Index): A real-time market index representing the market's expectation of 30-day forward-looking volatility. Often referred to as the "fear gauge."
• Volatility: The degree of variation of a trading price series over time, measured by the standard deviation of price changes.
• NASDAQ, Dow, S&P 500: Major US stock market indices representing different segments of the market.
• Resistance Level: A price level where a stock or index has had trouble moving above in the past.

VIX Movement and Market Volatility

The discussion centers around the recent increase in the VIX, specifically breaching the 19 level during the current trading session. This movement is considered logical and expected given the significant fluctuations observed in the NASDAQ, Dow Jones Industrial Average, and, most importantly, the S&P 500. The speaker emphasizes that this isn’t indicative of market manipulation ("fraud thing of any type") but rather a natural response to substantial market movements.

Historical VIX Comparison & Current Context

A key point highlighted is the dramatic shift in the VIX from early January, when it traded around 1450, to its current level above 19. While acknowledging a slight pullback from its peak, the speakers agree that the current volatility is justified. The S&P 500 is identified as the primary indicator to assess the validity of the VIX increase.

Significance of the 20 Handle & Nervousness at 19

The conversation references a previous live event where the importance of the VIX and the 20 level as a resistance point were discussed. One speaker expresses growing concern as the VIX approaches 19, suggesting it’s a level that warrants increased attention. They believe the VIX was “somewhat artificially on the low end” even during Friday’s substantial market sell-off, implying that the volatility hadn't fully reflected the underlying market stress.

Artificial Suppression & Friday's Sell-Off

The speakers suggest that the VIX may have been artificially suppressed at lower levels previously. This is contrasted with the recent increase, which is seen as a more accurate reflection of market conditions, even in the context of Friday’s significant sell-off. The sell-off itself is used as evidence supporting the need for a higher VIX reading.

Logical Connection & Synthesis

The discussion establishes a clear connection between market movements (specifically in the S&P 500) and the VIX. The speakers argue that increased volatility in the stock market should result in a higher VIX reading, and the current increase is therefore a natural and expected outcome. The conversation highlights the VIX as a crucial indicator of market sentiment and a valuable tool for assessing risk. The main takeaway is that the recent VIX increase isn’t a cause for alarm, but rather a healthy correction reflecting the current market environment.