Very Special VIX charts agree that equities are poised to go lower but shy about exact timing

I've "brushed up" my VIX chart, on which I draw trendlines that the VIX appears to be "using" as well as mark a few Fibonacci levels that look significant. Back in January there was talk of the VIX doing a gap fill at 35, and there was a 33.81 retrace level (.786 retrace annotated on the chart). Interestingly, there was a spike tail on January 28 that poked under that 35 level to that .786 retrace, and VIX has continued up since. (Also the spike tail disappeared from the charts after a day or so.) After the apparent triangle which also ensnared equities - and got a lot of traders fooled into thinking the markets were heading higher - VIX leaped up and that looks like a very significant "air gap" where one of my new trendlines belongs. I now see that the action since then closed that gap vertically, meaning that VIX (after reflexing higher) came back down on Wednesday and Thursday to fill the gap that had occurred. And yesterday, VIX moved above yesterday's high, as well as above its 50 dsma and other MA's and the BB midline:


Looking at a more ordinary VIX chart that doesn't have my trendlines, it's easier to see that VIX did poke above these moving average levels. But the Bollinger Bands are still channeling sideways - that can change of course! Then there's another thing - the StochRSI is still under the 50 midline. Obviously that can change too. But somehow, the way things were feeling yesterday, it's surprising the StochRSI isn't higher. Now - I'm not going to argue with the idea that the markets move lower, it's certainly been one of my theses since late December. I just don't know if I can give you any guarantees that it's a straight shot down to Dow 6000 from here.


I should post the VXO more often, it's considered a bit more "pure." For a long time, the real reason why I didn't use it for my trendline analysis charts was that the candles had a bunch of weird long tail spikes. You can see that it's actually been weeks since that happened, those spikes aren't showing anymore. So maybe I'll switch over to VXO (but I'm lazy, just finished updating my VIX trendlines, so maybe a switch to VXO will take awhile!).


And let's take the updated look at the weekly chart going back as far as we can. I added notes on it to refer back to the reconstructed data for 1987 (if I had accurate data on that). You can see that it's possible to do a kiss-back to the broken shallow trendline, before going back up again - but it isn't a guarantee that we drop down that far, until after some kind of move higher first. At this point, my personal guess is that we see it move higher in something that looks like an Elliott Wave "B" perhaps to the 60's. (By the way, I don't try to actually apply Elliott Wave to the VXO, VIX or VXN, but I did start to apply structure (trendlines) and Fibonacci because that "works" for me.)


And finally, a light-hearted reminder that even VXO is not the same thing as either VS, VSOP, or XO !! From the Wikipedia article about Remy Martin [http://en.wikipedia.org/wiki/R%C3%A9my_Martin] cognac:

VS Very Special, or *** (three stars) where the youngest brandy is stored at least two years in cask.
VSOP Very Superior Old Pale, where the youngest brandy is stored at least four years in cask, but the average wood age is much older.
XO Extra Old, where the youngest brandy is stored at least six, but average upwards of 20 years.