VIX revisited - Fear gives way to Greed

The VIX has finally broken the long standing trendline on the daily chart to make new 3 month lows. This indicating that fear is at a several month low.

So, despite terrible econmic data, poor housing numbers and GE missing for the first time in 20 years, the market is shrugging it off (at least temporarily).

The interesting part of this chart to me though is the huge and sustained sell offs that have occured after the LOW spikes in the VIX, notably OCT, DEC and FEB.

The break of the trend may break this spell, but extremes are often met with extremes to the other side. We'll see.

At this point, with the bullish sentiment in the air, the chart seems to show us that a VIX in the 18 range is a likely level before bouncing up again. We may see that early next week if the rally continues.

I don't foresee a VIX below 18 with the current economic conditions, but we must remember that anything is possible and we must trade what the charts are telling us.

CBOE Volatility Index ($VIX) The Fear Gauge