Listen to the audio version of this article (generated by AI).
The selling pressure in the broad stock market this week has set the stage for a Volatility Index (VIX) buy signal.
A VIX buy signal occurs when the index first closes above its upper Bollinger Band and then closes back inside the bands. We’ve seen seven VIX buy signals already this year. And, any day now we’re going to get number eight.
Look at this chart of the VIX along with its Bollinger Bands…
Bollinger Bands indicate the most probable trading range for a stock or an index. Whenever a chart moves outside of its Bollinger Bands, it signals an “extreme” condition – which is vulnerable to a reversal in the other direction.
In the case of the VIX, these extreme conditions trigger buy and sell signals for the broad stock market.
On Wednesday, the VIX closed above its upper Bollinger Band. When it closes back inside the bands, the VIX will generate a broad stock market buy signal. That could happen as soon as today.
We’ve seen seven such buy signals – or buy signal clusters, when the VIX generated two or more buy signals within just a few days of each other – so far in 2026. Here’s how the S&P 500 behaved following each of those signals…
The stock market rallied in the days immediately following six out of the seven VIX buy signals.
The S&P 500 rallied 150 to 200 points in a week following the signals in January and February. The buy signal in late March marked the start of an enormous, intermediate-term rally phase. The June buy signal preceded a 250-point rally in the S&P in just two weeks. And, the most recent buy signal, last month, came right before an immediate 150-point rally and eventually a move to new high for the S&P 500.
The one failed buy signal in early March preceded a 400-point drop in the S&P 500. That was painful. But, it led to an even more significant buy signal later in the month.
With an 86% success rate so far this year, traders have done well to buy stocks when the VIX told them to do so.
The VIX is now, once again, on the verge of telling us to buy.
There are still plenty of reasons to be cautious on the stock market as we head through the final quarter of 2026 and beyond. But, for the next several days – and maybe even the next few weeks – a VIX buy signal could lead to one heck of a short-term bounce.
Best regards and good trading,
Jeff Clark
Editor, Market Minute
P.S. Just in the last two weeks, my subscribers have had the chance to see a 60% gain in four trading days, a 58% gain in two days, and a 30% gain in three days. I’ll be sending more trade alerts as this VIX buy signal plays out. Check out how to get my trades right here.