VIX at Extreme

The VIX has hit 36 today, a level not seen since mid Mar this year during the Bear Sterns saga. In the chart above, I annotated the recent last 3 times where VIX hit this high. As we all know, the VIX is a fear gauge and usually when it is at extreme, the market is likely to reverse.

But I'm not calling for a bottom right here right now. The major indices have broken new lows and closed with wide range bearish bars today. Also, notice how the VIX bar closed today is different from the last 3 times. It closed with bullish engulfing bar, different from the bearish upper tails or bearish bars it closed the previous 3 times when it hit 36 level. So while the level 36 is a resistance, the market doesn't look like its about to turn around, yet. Watch for market capitulation, bullish candlesticks at support areas for the major indices and the VIX turning down for confirmation of turn around. It could be happening quite soon...