The S&P is up 8% year-to-date. VIX is going up with the S&P. What's next


This market study comprises of 2 parts.

The S&P is up 8% year-to-date

The S&P 500 is currently up more than 8.3% year-to-date. This is a respectable return, considering that the S&P’s average annual return from 1950-present is 7-8% a year.
In other words, the S&P has achieved its average annual return in 8 months.
Here’s what happens next to the S&P (historically) when it goes up 7-10% from January-August of each year.

Now let’s expand this study. Here’s what happens next to the S&P (historically) when it goes up 5-10% from January-August of each year.

As you can see, the results for both of these studies are bullish, but not particularly bullish.
Here are some exceptionally bullish studies (here and here)

VIX is going up with the S&P 500

It’s been 2 consecutive days in which VIX has gone up together with the S&P 500. These 2 markets usually move in opposite directions.
Since VIX is now going up with the S&P, some people see this as a bearish sign. Is it?
The answer is NO. Since 1990, there have been 102 historical cases in which VIX went up 2 days in a row while the S&P went up 2 days in a row. Sometimes the stock market went down after this signal came out. Sometimes the stock market went up after this signal came out. Forward returns were random.
This is neither bullish nor bearish. It’s irrelevant. Here are the last 10 cases.

  1. 11/06/2018
  2. 12/01/2018
  3. 9/01/2018
  4. 17/10/2017
  5. 4/10/2017
  6. 29/08/2017
  7. 27/12/2016
  8. 8/12/2016
  9. 12/07/2016
  10. 8/06/2016

This isn’t something to worry about right now, but watch out if this persists.

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