Had clearly mentioned watch out for bullish CBOE VIX and had said that above 26 it can easily reach 28 odd levels which will mean correction for DOW. Yesterday VIX ran past the 26 barrier to close at 28.27 accompanied naturally by a significant correction in DOW.
Now further important points to watch
28.40 is the 23.6% retracement on VIX from all time high to all time low in the last three years.
VIX has closed above the trend line resistance and also above the 100 DMA.
There is faint resistance at 29.38 as show in the chart
The major resistance is at 30.13-30.40 which is a upper gap resistance again shown in the chart as a circle.
If VIX closes above 30.40 then it can easily touch 34-35. This 34.-35 region represents a confluence of the 200DMA, also 38.2% retracement from March highs to recent lows and also the 23.6% retracement from DEC 2008 highs to recent lows. All these factors make the region of 34-35 a ideal confluence target which can be easily achieved if VIX closes above 30.13
VIX reaching 34 -35 will mean a significant correction for DOW and most probably the whole world markets.
SO all bullish bets in DOW are off once VIX closes above 30.13
However if it fails to cross 30-31 region then DOW will continue to rally which will extend into the world markets too.
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