Here is a 3 year weekly chart of the VIX, aka the Volatility Index. In simple terms this Index measures the level of fear and volatitlity in the market. It also has to do with option buying and selling, but that is a whole different more complex post. What I want to show is the lower rising trendline that has been support over the last 3+ years once again get tested and bounce back up off of. Showing that the market is still indeed respecting this trendline. We also have the 200 day simple moving average (green line) as rising suport as well. Lastly look at the MACD, you can see the black line curling back up and the histogram starting to slow as well.
What does this mean? Well the relationship this index has with the SPX is for the most part as the VIX goes down the market goes up, and when the VIX increases the market sells off. Take a look at the absolute peak of the VIX at 89.53 back in Nov '08. That was during one of the biggest market sell offs of our time, so I say that as an example of how this index works. You can say the VIX is like an inverted vehicle to the overall market itself.
Buying VIX calls may be a good option if we see the VIX continue to rise and respect this trendline which I believe we will. Remember also option prices increase as the VIX climbs higher so, SPY puts may be a good option as well if the market continues to sell off because you have the sell off and the VIX spike you have two factors that increase your positions at the same time.
A lot of interesting things internally going on in this market, I showed the head and shoulders toppping pattern that is still playing itself out in the short term. I hope to show a more intermediate term chart(s) to show the bigger picture in how this is just one move in series over bigger market movements.