Today's Market: Bearish Divergence in VIX

In today’s market we saw a major bearish divergence in the correlation between SPY and VIX futures (and VIX) with the SPY closing up 0.6% and January VIX futures up 2.34% (as reflected by the move in VXX). This reflects a strong bid for put protection in January options as I discussed would happen last week.  In fact, over the past three days both the spot VIX and January VIX are up over 8% while the SPY is up nearly 1%. What this is telling us is that a pullback in SPY down to near support at 142 in the near future is very possible. Surely you bought some protection after I suggested in my previous post?

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