As mentioned in the Mid Week Outlook the VXO has had only had "3" occurrences since 1986 in which the VXO rise 15% or more and the S&P 500 ended with a positive day. These occurred on 2/15/2017, 5/5/1997 and way back on 8/11/1987.
The prior event in May of 1997 (point A) was followed by higher prices over the next several weeks with an 17% gain in the S&P 500. This was then followed by a sideways pattern the rest of the year before another surge in 1998.
Meanwhile the event back in August of 1987 (point B) signaled a top followed by a 36% correction in the S&P 500 in just 9 weeks. Thus the prior two events led to vastly different outcomes in the market.
Finally another interesting development occurred this week in the Dow as it is now up 11 days in a row. As you can see below this doesn't happen very often. Furthermore this is the first time since 1929 that the Dow has been up at least 10 days in a row with the S&P at the top of its longer term upward channel (point C). Of course that didn't end well for the market which fell 89% over the next three years.
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