The VIX (Volatility Index) inflected off 2008 lows and support just as the US Stock Market met resistance, which set up a nice confluence that could have clued you in to odds of lower prices in the broader indexes recently.

First, let’s see the Weekly Chart to see when the last time we reached these levels and the potential support that was met at 16.

The 200 period weekly moving average came into play last week as the index tested this level just as the Indexes tested their 200 period average as potential resistance.

The VIX has fallen from near 26 to 16 since March, 2008.  When the VIX hit the 16 level, it reached a level not seen since July, 2007 (almost one year ago).

Let’s look at the Daily chart to glean possible clues there:

The index is clearly in a downtrend (as the market has been in a short-term uptrend) and could be facing overhead resistance.  Because the VIX has a tendency to be more ’spiky’ than the Indexes, it is much more difficult to peg resistance zones than support zones, but in a trend, moving averages can provide support or resistance to prices.

Prices fall faster than they rise, and so the VIX has a tendency to rise faster than it falls (as this chart clearly indicates) so should there be further downside in the US Markets, expect this index to spike as well.