Volatility – Weekly Analysis
The Volatility Index has shown a mix of clear signals lately that traders shouldn’t ignore. In this weekly update, we’ll take a straightforward look at what those signals mean, how momentum is shifting, and what to watch for next as the market sets up for its next move.
This focused Volatility Index review is for members only—an important read if you want to keep ahead of any surprises this week.
CANDLES
Daily
Weekly
MACD – 15D
The Volatility Index continued its downward move this week, with three out of the four instruments we track forming bearish weekly candles. VX was the exception, printing a Bullish Engulfing pattern—but it’s unclear if this is just noise following the recent contract switch or the start of something more meaningful, which still needs confirmation. Friday’s daily closures were fairly neutral, so a short-term bounce early next week wouldn’t be surprising. Overall, though, the mid- and long-term outlook remains bearish.
One key development to watch: VIX is now very close to forming a 15-day MACD bearish cross on Thursday, July 17. If this cross is recorded and supported by a few additional signals, it could set the stage for a longer-term bearish stretch, similar to those seen in 2020–2021 and 2023–2024, which typically last about a year. Notably, this timing would align with the start of the Q2 earnings season, kicking off with JPM, WFC, C, and BLK reporting on July 15. The market will likely digest that initial earnings data and start making some longer-term moves, which will probably be reflected in the decision on the 15-day MACD cross just two days later.
On the chart, the index has bounced off the lower boundary of the flag formation we discussed earlier. The most probable scenario now is a period of consolidation before a possible breakdown. That said, a large gap adds an extra layer of uncertainty that should not be overlooked.
Happy Trading!
