What's Up with the VIX?

One of my favorite Sentiment Indicators has been and continues to be the Volatility Index or VIX. I prefer to call it the Complacency Index. Low readings, such as we have been recording for some time now, indicate the absence of investor fear or concern. High readings reflect worry or uneasiness. Sky high readings indicate PANIC.

I am not sure what is going on but the VIX has scored a five week high today for some reason. I tend to watch this indicator in conjunction with the action in the equities as a way to gauge any potential shift in overall confidence.

In my view, the only thing that can bring a firm bid into gold and reverse the current bear market in the metal is a heightening of fear/unrest/unease or better, a growing lack of confidence.

Yesterday we had a move higher in the Dollar. Today that has been erased. With the Dollar weakening gold is getting a bit of a bid today. Also aiding the metal is the sharp, and I do mean 'sharp' rise in crude oil. It touched $96 ( basis WTI ) in today's trade and is currently up over $2.00 barrel as I type these comments.

Let's continue to monitor the progress of the VIX and especially monitor the price action in the S&P 500. Upside momentum continues to wane in the latter market but then again it has been for some time now. I keep picking up one negative divergence after another but the market keeps shrugging those off with dip buyers continuing to come in. If the stock market does finally actually respond to one of these negative chart signals, I expect the VIX to jump even more. At that point we will watch gold closely to see if it can gather some better buying interest.

Stay tuned...