Is VIX Telling Us Something?

The attached chart shows a change in behavior of VIX. Last fall VIX was falling (Line A) while SPX was rising (Line B). Since the March decline and subsequent rally, however, the lows in VIX (Line C) are sloping upward and diverge – so far – from the level of SPX (Line D). Could this be an early warning of a further correction? Remember the old adage: Sell in May and go away.

SPX vs VIX 9/1/10 – 4/5/11

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Jim Bittman

Mr. Bittman is the author of two books, Options for the Stock Investor, (McGraw-Hill, 1996), and Trading Index Options (McGraw-Hill, 1998). He teaches courses for public and institutional investors, and he has presented several custom courses throughout the U.S., Europe, South America and Southeast Asia. In 1980 Mr. Bittman…