Yes Virginia, the VIX is dropping again - into the teens helping fuel seasonal rally

Yes Virginia, there is a Santa Claus - rally, at least! Some call it a seasonal rally as this time period into early January is often strong (and interestingly, many large funds rebalance mid-January which helps focus for that time period). And VIX is helping, isn't it, with the drop into the teens. While it hit the lower Bollinger Band which can slow it down, my next major Fibonacci level for VIX is at 16.91. So let's keep an eye for that assuming the equities rally continues as expected.

You can ignore most of my old notes on the VIX charts below. It is possible that lower to 16.91 will touch a trendline extension or two. Meanwhile, any ideas of VIX above 30 need to be shelved until a few weeks go by. The pattern VIX is tracing can turn into a reversal except it doesn't look complete to me - I think it will need another extension wave down to form a completed structure.

Sure, it still looks like positive divergence building on the weekly, and now the daily. But that's a situation, not a trigger. For now, whether you believe in Santa Claus or not, it would behoove you to believe in this rally. The SPX has moved well since Friday's low and with equities levels at or near new breakout levels, there's no incentive for the Big Money to sell.

ADDED NOTE: That pressing the lower Bollinger Band could lead to a bounce or considation in the VIX, and the reverse in equities, even if slight and temporary. Doesn't mean a reason to sell out, because it can easy be a natural short-term fade before resuming the trend.