RICHARD RUSSELL: The VIX Is Warning Us This Is 'THE CALM BEFORE THE STORM'

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Photo: Wikimedia Commons

Richard Russell, the bearish author of the Dow Theory Letters, has yet another reason to be bearish: the VIX. The VIX, aka the fear index, is a measure of implied volatility.

He writes in King World News:

Starting in August the VIX headed down again as investors’ nerves settled down.  The VIX hit a low in April.  But the latest reading is a sudden surge above the 50-day MA.  This suggest that investors are getting a bit nervous again, and that some rocky weather may lie ahead.  I think hat the dividing line for the VIX is around 25. 

If the VIX climbs above 25 I take it as a sign of forthcoming trouble.  The latest VIX is around 18.23 — basic complacency, but the complacency has probably dropped as low as it’s going to go.  ‘After the calm comes the storm.’

Russell’s piece was accompanied by this VIX chart from StockCharts.com.

chart

Photo: StockCharts.com

Russell also warns that Brazilian, Chinese, and Russian markets don’t look that great either.

Read more at KingWorldNews.com.

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