RVX: Reality Check

The Russell 2000 Volatility Index ($RVX) continues to show that there is still a good amount of fear lurking in this index. Unlike the VIX which has broken below it's daily 20MA, the RVX at 71.85 is still above the 20MA on the daily.

For the last three and half weeks the RVX has been stuck in a range between 87.50 and 62.50. With last Monday's sell off it hit 77.50 for the day.

More than anything else, this range is reminding us that we are still at historically high volatility levels and large moves up and down should be expected. This will likely mean more chop on the daily charts.

Many continue to say that we are forming a bottom which is the same rhetoric they've been repeating erroneously for the last 4 months and have been wrong every time.

Rather then predicting bottoms or tops we may be better served by tightening our trading time frames and therefore having better control over our trade entries and exits. There is a reason the RVX is at 71.85, and that is because there is a high probability of large price fluctuations - Monday was a grim reminder of what high RVX is all about.

We continue to be in an intermediate downtrend and despite intermittent rallies we need to remember that the greater river is running downstream right now. That doesn't necessarily mean to be short right now, but if you look on the daily RUT charts it's clear that the RED candles are the biggest and most prevalent.

Reminder: Before this September the RVX ALL TIME High was a spike to 44.43, Last week we had a solid bodied candle with a range 65 to 77 - don't get to comfortable yet...

RVX Daily Chart:



RVX Weekly Chart: Still above 8MA (bearish)