The Pentile Rank (PR) of VIX in relation to VVIX, VIX9D, VIX3M, and VIX6M shows the market is still highly hedged despite the large advance on Friday 6/24/2022 (table below).
It is interesting to see the PR of VVIX is reaching close to its 52-week low. It reached 91.34 on 6/24/2022 (image below). VVIX does not stay at such a low level for a long time, indicating the market will likely turn again relatively soon in the coming days.
SPX Technical Analysis
There are two large gaps (red arrows) and one of which was filled by the Friday rally. These kinds of large gaps typically get filled at some point from a technical standpoint so the current rally might fulfill that.
Looking at the uptrend formed recently though (yellow arrow), it is in such a sharp uptrend angle that it is questionable if this can be sustained long term. It is likely a sideways move might occur for a few days here and there even if the trend does continue to move upwards.
I will be looking at SPX 4,016 level closely as that is where the second large gap is. If that second gap gets filled I will look to initiate some hedging positions expecting the market to start declining again. I will also look closely at the market internals and the VIX indicators. Will scale more hedging positions depending on what these indicators show.
One reason to expect the market to still go down is due to the large downtrend line (green arrow). Unless we cross above it, all the rallies should be treated with caution because the market as a whole is still in a downtrend.