Should We Be Worried?

Heather Cullen

Heather Cullen

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In The Money

In The Money Heather Cullen SPY ITM update VIX 20 years

SPY continues to make record highs, and is up 23% since September. Nice. And ITM is up 95% – even nicer!
I am often asked: can it continue to go up? To answer that I would have to be able to foresee the future, which is not one of my talents! What I CAN do is look at the chart for clues.
​First, I will look at the VIX, the Volatility or ‘fear’ Index, the blue chart below. The VIX is not high, and has been trading below 20 for the whole of April. Historically, the VIX can go for long stretches below this level (the pink horizontal line) spiking only when there is a crisis – like the GFC (89.5) and Covid (85.5). It is not extremely low (below 10) which many traders consider a warning sign as it shows complacency. However, it has only been below 10 twice in the last 20 years, and both times the market continued to go up so there is little evidence that it is a predictor of a downturn. In any case, the current level of 17.6 is neither historically high nor low.
Next, SPY, the yellow chart below. SPY shot through 400 without a backward glance which was quite surprising. Even more surprising is that it hasn’t faltered since or retested 400 as support. It continues to go up in a very measured way – lots of small candlesticks and has been in a period of consolidation since mid-April, which is a healthy sign.
So no warning signs from the charts – but I’ll keep watching and let you know if I see anything bad!

In The money Heather Cullen SPY ITM update 30 April

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