VIX index trades 7.97% higher at 20.04, making fresh 6-week highs. VIX soared yesterday after the US ISM manufacturing report came at 47.8 the lowest level in ten years. That was the buy signal for VIX. Investors dump S&P 500 after the news and continue today to sell the stocks.
Vix index, gains over 30% the last three trading sessions, showing that fear has returned in markets. Global slowdown worries increased after the disappointing manufacturing figures from main economies around the world. Vix index hit a 12-month high at 36.20 on December 2018, while the YTD high stands at 24.70 from August 5th. The index needs 4.70 more points to hit the yearly high a level that if reached, suggests that the S&P 500 will move down to August 5th low at 2,774. S&P 500 as of writing gives up 1.75% at 2,888, breaking below the 100-day moving average which opens the way for a visit down to 200-day moving average at 2,845. The next critical support for S&P 500 is the August low at 2,774.
The Volatility Index (VIX) uses the S&P500 options to represent the expected volatility for the next 30 days. If the Volatility Index is at 20, it means that the market expects a 20% annualized change over the next 30 days.