What's in a number? VIX just under 33.81 again, as VXN joins Fibonacci retrace level

In the last few minutes today, VIX went under 33.81 to close at 33.74. VXO was also lower than its low of April 17. This means that the VIX has again poked under the Fibonacci retrace level we identified on the monthly charts. How significant is this? Frankly it is difficult to say based on this data point alone, given how it did this literally in the last few minutes (it did spent the last hour looking like it "wanted" to). The real key is whether - or not - VIX exhibits a reversal pattern from this level. Can it be that VIX and VXO were just "waiting" for VXN to join in the retrace to the key .786 Fibonacci retracement? The bottom chart (below) shows that VXN pressed its lower Bollinger Band on the weekly, and of course it's still pressing on its BB midline on the monthly (shown recently here). VXN's daily chart (not included below) shows it made a new low today that, for the first time since its highs last fall, visited its .786 retrace (at 34.04) back to its swing low of a year ago. We might think that the markets were waiting for all three volatility indices to complete this retracement. But, are there other clues whether to expect a reversal?

StochRSI shows positive divergence on the daily charts of these three volatility indices. So that can support a reversal ... but it isn't guaranteed, so a swing trader wouldn't "bet the farm" on this alone. My trendlines are more updated on my VXO chart than my VIX chart because I'm changing over to focus more on VXO. On both (and on VXN actually), the "hugging" of the downtrend line is a clue to look for a trigger day in the other direction. The moving averages remain stretched - the recent snap back to the 20-day moving average didn't have much effect yet, so perhaps the next snap back to moving averages will. Then we'll need to look to other methods for clues, methods that are the subject of various other posts here of course.

As for having reached this Fibonacci retracement level - I think it's important because it's based on looking at swing high and swing low levels on the big-picture, weekly charts. Certainly there are lower levels that these volatility indices can go to (I've already mentioned one for the VIX at 24.80). First we still need to evaluate whether we see a reversal pattern from these levels. Also, I've got to address briefly something else - what happens when VIX doesn't make new lows, while the equities indices do make new highs? We have seen this happen numerous times, even on the big-picture charts. In the time that I've been watching it, my impression is that when equities went higher but VIX didn't make new lows, that's been bearish for subsequent equity markets action (and the reverse being true too). The volatility indices haven't gone as persistently down during the past two weeks, while equities have stepped higher. So this form of divergence doesn't appear bullish for equities down the road.