There are so many crosscurrents today -- options expiration, healthcare reform, S&P rebalancing, among other things. Let's see if the VIX-SPX relationship can shed any light on what the market is "really" doing...

The SPX (cash S&P 500 hourly chart) made a new high Wednesday at 1169.84, and right at the open the VIX made new lows today at 16.17, before reversing to the upside to 17.40, where it has smacked into a 3-week resistance line.

If the equity market is turning down for a meaningful correction, then the VIX must close above the trendline -- and preferably above 17.70. Otherwise, provided today's low remains viable for a while, what we have is just a new low -- and the first coordinate in a new bottoming effort. ETF traders may want to watch the Barclays Bank iPath S&P 500 VIX Short Term Futures ETN (NYSE: VXX) and the S&P 500 Depository Receipts (AMEX: SPY).

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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