Volatility – Quick Update
Volatility charts may be flashing an important signal.
In this quick update, we break down the latest technical signals across key timeframes to determine whether volatility is truly rolling over, or quietly preparing for another surge that could add renewed pressure on the markets.
CANDLES
The daily close across the three VIX trackers was simply too strong to ignore. All three formed clean Bullish Engulfing candles. VIX, SP500 volatility, and VX pushed above the 8 EMA, while the broader technical backdrop was also strongly supportive across other indicators.
The new candles, which opened a few hours ago, are red so far, almost as if the bears just realized that they not only failed today, but failed in style. Or perhaps the bulls were simply brilliant.
Nevertheless, tomorrow is when volatility will truly test the odds. By my combined scale, today’s close carries an 85–90% probability of higher prices tomorrow and about an 80% probability of forming a green continuation candle.
Regardless of the overnight noise, the real battle is scheduled for tomorrow: statistics against the talking heads on the business channels.
By the way, I think the main message from the Fed today was not the hold itself. The hold was not the story. The story was that three members objected to the easing bias, while only one wanted a cut. That shifts the center of gravity away from a clean dovish path and toward a more unstable, two-sided Fed reaction function.
There is also an important leadership layer to consider. The next Fed regime may not represent a simple dovish replacement for Powell. Warsh is often viewed as more skeptical of the Fed’s large balance sheet and market-support role, even if he may be more open to rate cuts. That creates a more complex policy mix: potentially easier on rates, but less clearly supportive on liquidity. For markets already dealing with energy-driven inflation pressure, that is not a straightforward bullish message.
For equities, this is not catastrophic by itself, but it removes support from the “cuts are coming” narrative. For bonds, especially the front end, it is clearly bearish. For the dollar, supportive. For oil and inflation, the key point is that the Fed is treating the energy shock as an inflation risk that can delay easing, not as something it is ready to ignore. This is not a surprise if you follow our GITT index.
Now we need the overnight session to let this message get under the market’s skin.
Be prepared. Stay alert.
