I'll be the first to admit that calling tops and bottoms is more of a parlor trick than a science, yet it is my opinion that the recent triple top in the VIX – which includes today’s spike to 29.62 – will likely turn out to be the high water mark in the VIX for the month of March.
This may sound like a dangerous prediction, but I am giving the March 11th lows a better than 50% chance of holding and am somewhat emboldened by the fact that when the VIX spiked to 29.62 this morning, the financials (XLF, if not BSC) were holding their ground above the lows for the day. To my thinking the financials continue to be the market’s Achilles’ heel and to the extent that XLF can keep from making new lows, the VIX is likely to see 30 as a near-term ceiling and the financially-heavy SPX and other broad market indices should be in a position to rally from Tuesday’s lows.
I would be remiss if I failed to point out that many pundits are saying that the market will not bottom until we see a VIX spike to somewhere near the 37.57 level that was reached when the markets made a previous bottom on January 22nd. There is always the risk that a consensus of opinion can lead to a self-fulfilling prophecy, but I am willing to bet against the masses on this one. That being said, it won’t take many more Carlyle Group disasters to push the market back into panic selloff mode.