VIX Suggests Rally Can Continue

09/14/2010 2:49 pm EST

Focus: OPTIONS

Thomas Aspray

, Professional Trader & Analyst

chart
Click to Enlarge

Even though the Volatility Index (VIX) is up a bit in afternoon trading, the trend is still clearly lower as it peaked in May, which coincided with other measurements of bearish extremes for the stock market. Despite the prevailing negative sentiment, the VIX was still weak in August, which turned out to be a warning for the bears. Strong action of the Advance/Decline (A/D) line is also bullish, and the VIX could drop back to the 18-20 area.

Tom Aspray, professional trader and analyst, serves as video content editor for MoneyShow.com. The views expressed here are his own.

Related Articles on OPTIONS