Sentiment Towards The Volatility Index Plummets To Single Digits

I discussed this week’s chart on Stock Market TV and again with Charles Payne on Fox Business on Monday afternoon. Equities have shown strength with the recent break above 4220 on the S&P 500 but sentiment towards the Volatility Index is reaching extreme levels.

As the VIX hit a new 1-year low last week, sentiment has fallen to single digits as well. The Daily Sentiment Index (DSI) for the VIX was 9% bullish on Friday, the lowest level at the start of the year. We don't see sub-10% levels very often. Below I've plotted when DSI has fallen under 10% since 2017. Historically, volatility hasn’t moved much lower once sentiment gets this bearish on the VIX. Even one of the least volatile years in the last decade - 2017 - saw VIX bounce higher once its sentiment went sub-10%.

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Disclaimer: Do not construe anything written in this post in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned.

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