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Weekend Analysis by Amateur Investors
By Amateur Investors | August 12, 2017

The VIX rose 44% on Thursday which was the 9th largest Daily % gain since 1990. However the S&P 500 only fell 1.5% which isn't very much based on other events that exceeded 2% in most cases. Also notice in 8 out of the 10 events the S&P 500 closed higher the next trading day, so Friday's bounce wasn't much of a surprise.

10 Largest Daily Gains in the VIX since 1990

 
 Date	        VIX	S&P 500	S&P 500	   Low	       # of    Next 
              % Gain	Daily LossMax Loss Date	       Days	Day 
 02/27/2007	64.2	-3.4	-5.9	3/14/2007	12	Up 
 11/15/1991	51.7	-3.7	-6.5	12/2/1991	11	Up 
 07/23/1990	51.5	-1.7	-18.6	10/11/1990	58	Up 
 08/08/2011	50.0	-6.7	-10.4	10/4/2011	41	Up 
 06/24/2016	49.3	-3.6	-5.8	6/27/2016	2	Down 
 08/21/2015	46.4	-3.2	-8.5	8/24/2015	2	Down 
 05/17/2017	46.4	-1.8	-2.2	5/18/2017	1	Up 
 08/24/2015	45.3	-5.3	-5.3	8/24/2015	1	Up 
 8/10/2017	44.4	-1.5	?	?	?	Up 
 04/15/2013	43.2	-2.3	-3.8	4/18/2013	4	Up

I'm sure many believe that a repeat of May 17th will occur in which the VIX rose 46%. This was followed by a bottom in the S&P 500 the next day (point A) and a sharp rally to new all time highs (points A to B).



Meanwhile the VIX, on a linear scale, is attempting to break out of its narrowing downward channel which has been in place for several months.



However, looking at a log scale, the VIX encountered resistance at the top of its downward channel. Thus the question is will the VIX follow through to the upside or not the next few weeks?



Despite the VIX rising substantially this week the S&P 500 only dropped 2% from its all time high. If the S&P 500 continues to pullback there is support around the 2400 level which is along the upward trend line from the early 2016 low.



http://www.amateur-investors.com/AII_Weekend_AnalysisAug_12_17.htm

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