How Do You Spell V-o-l-a-t-i-l-i-t-y? Suddenly, It's VIX

Just when the pundits declared that volatility was dead because of all the passive investing and indexing, bam! The VIX spiked higher yesterday and today. Traders now are looking back at what Jeffrey Gundlach, DoubleLine CEO, said yesterday on CNBC.

The VIX has been trending lower for months, with brief and short-lived up-thrusts. In the daily chart, below, we can see the down trend and negative slope for the 200-day moving average line. Notice the higher lows from the 12-day momentum study? The lows from May to June to July have been higher and higher even as the VIX has gone lower and lower. This difference is called a bullish divergence by technical analysts. The pace of the decline since May has slowed. In the lower panel the trend-following Moving Average Convergence Divergence (MACD) oscillator also has made higher lows and is crossing above the zero line for an outright go-long signal....89 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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