Normally, a drop below the 200-day moving average and the turnaround we saw Tuesday would have caused some pop in fear.
This is a play on a long-term, not a short-term directional trade I normally like.
A selloff with a soft VIX followed by a rally with a really soft VIX tends to mean the easing of fear in the near term.
Heading into the long Memorial Day weekend, here's how I would play the S&P 500.
Does anyone really think this feels even remotely as scary as December?
I think the high in the VIX is in unless the worst happens between now and Friday.
The VIX is way too high.
The risk of being 'long and wrong' is now elevated while the upside profit potential is likely minimal.
The PEG ratio is elevated in some stocks, keep an eye out for exposure.
Our outlook is the same for now, but there are some warning flags starting to appear.