This morning the S&P 500 (SPX) popped to a new recovery high above the Jan peak, although it has traded lower since then. It is interesting to notice that while the SPX climbed into new high territory, the cash VIX did not decline to new lows -- either beneath its Mar or Jan lows.

From a technical perspective, this represents additional evidence that the VIX is sending us a signal that the SPX -- and its ETF, the S&P 500 Depository Receipts (SPY) -- is approaching upside exhaustion. That said, unless and until the cash SPX breaks below 1145, and more importantly 1139, the bulls will remain in directional control regardless of the relative strength warning issued by the VIX.

By Mike Paulenoff

Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

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