Dan Russo, Technical Analyst and Principal of Institutional Sales at Needham & Company LLC in New York, looks at VIX curve inversions (when the One Month VIX is greater than the Three Month VIX) and describes how they are usually a harbinger of short-term rallies for the S&P 500.
Russo notes that when the VIX curve has closed inverted on its previous 64 times over the last five years, the S&P 500 has rallied 82% of the time over the next 20 days with an average return of 3.7%.
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