VWSI at +3

After several weeks at zero, the VIX Weekly Sentiment Indicator (VWSI) is once again showing a directional preference with the current +3 reading. For those who may skip the fine print below the graphic, this means that I am officially neutral, but borderline bullish, in the direction of the VIX over the course of the next 1-4 weeks. Without trying to sound like a two-handed economist, this also means that history and statistics are on the side of the VIX moving up from these levels, but that the edge is not significant enough to warrant my taking a long position in the VIX at this time.

Also, while I use the VWSI as a trading signal for trading the VIX and not the broader markets, it is still reasonable to interpret the a VWSI as suggesting that the markets are likely to trade sideways to down in the next few weeks.

For the record, the VIX needs to drop another point or so next week before I would start buying calls.

(Note that in the above temperature gauge, the "bullish" and "bearish" labels apply to the VIX, not to the broader markets, which are usually negatively correlated with the VIX.)

Wine pairing: For a VWSI of +3, I recommend a sauvignon blanc. Traditionally the primary white wine varietal of Bordeaux, sauvignon blanc floundered for years in the US as “the other white wine grape” for those who decided they needed an occasional break from chardonnay. Robert Mondavi began calling sauvignon blanc by the name of fumé blanc in 1968 and helped to increase the prestige and awareness of the varietal to some extent, but also created considerable confusion among the largely unsophisticated American consumers of the era.

In the 1980s, sauvignon blanc experienced a renaissance with the help of innovations in New Zealand that involved fermentation in stainless steel tanks instead of the traditional oak barrels and resulted in a refreshing, fruit-forward wine that bore only a passing resemblance to the lemony, grassy efforts that were common in the US. In the last two decades, the fruity stainless approach has come to dominate much of the new production and has helped to restore the reputation of the varietal and dramatically increase demand and acres planted.

Thom Elkjer offered up a summary of the recent history of sauvignon blanc in his “The Many Faces of Sauvignon Blanc” article in the San Francisco Chronicle back in 2004. His assessment still holds up well today. Elin McCoy provides a current evaluation of the grape, along with some suggestions, in “Food-Friendly Sauvignon Blanc Wine Sheds Its Underdog Status.”

In terms of a specific recommendation, you might as well start with a Marlborough sauvignon blanc from New Zealand from the winery that played the biggest role in kick-starting the Kiwi sauvignon blanc revolution: Cloudy Bay.