Bullish signal for 3-month VIX vs VIX

Tactical sentiment generates a bullish climactic signal

The 3-month VIX relative to the VIX (VIX3M/VIX) showed tactical fear on last Thursday's (10/16) drop below 1.0. When the near-term VIX spikes above the 3-month VIX, the VIX3M/VIX moves below 1.0 as traders panic about immediate risks. When the ratio flips back above 1.0, this panic subsides, which often marks a tactical buying opportunity. The VIX3M/VIX moved back above 1.0 on Friday (10/17).

This tactical panic signal occurs as the S&P 500 defends its key support at 6550. In addition, rising 26- and 40-day moving averages near 6661 and 6600, respectively, bent but did not decisively break—keeping the tactical uptrend intact until proven otherwise.

Chart 1: S&P 500 (top) and the 3-month VIX relative to the VIX (bottom)

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