Chart of the Day - Tuesday, August 11th, 2020

Today’s Chart of the Day was shared on Twitter by  Andrew Thrasher (@AndrewThrasher). The chart shows the Volatility Index ($VIX) and the Volatility of the Volatility Index ($VVIX). Andrew points out that $VVIX failed to make a new low along with the $VIX recently. The last time Andrew pointed out a divergence between these two was back in mid-February, just days before the crash began. This divergence doesn't necessarily mean that we're due for another epic crash. But, it is a sign that stocks could experience some turbulence in the near-term. In a comment to The Chart Report, Andrew said, "It's worth paying attention anytime $VIX and $VVIX diverge like this. Not a great look for volatility, when you pair this divergence with the fact that sentiment on the $VIX is only 8% bullish right now." Few analysts understand volatility as well as Andrew. In fact, he won the 2017 Charles H. Dow Award for his research paper titled "Forecasting a Volatility Tsunami." Check it out if you're interested in learning more about this topic.