The stock market could stop short of new highs — but that seems unlikely now

Lawrence G. McMillan

Buy signals and bullish indicators are coming into focus

Last Updated: May 15, 2025 at 10:54 p.m. ET
First Published: May 15, 2025 at 4:10 p.m. ET

It’s important to monitor the difference between VIX VIX and the 20-day realized volatility (HV20) of the S&P 500 (SPX) SPX. There have only been a few times in U.S. stock-market history when VIX minus HV20 has fallen below -10, and this most recent move was one of them. It reached -26 at its nadir a little over a week ago.

But now, the situation has reversed and HV20 has fallen to be almost equal to the VIX. This is an intermediate-term buy signal for the U.S. stock market. Specifically, the differential dropped far enough by May 9 in order to generate the buy signal. So, we are going to act on that with a long-term position in SPDR S&P 500 ETF Trust (SPY) SPY options.