Record Surge in VIX Signals Market Bottom to Canaccord's Dwyer

(Bloomberg) -- Add Canaccord Genuity’s Tony Dwyer to the list of strategists who say the weeklong selloff in equities is nearing an end.

Dwyer pointed to a record surge in the Cboe Volatility Index above 20 as a sign that investor anxiety are reaching “a tipping point.” The gauge of S&P 500 options, commonly known as the VIX, jumped as much as 106 percent to 36 and traded around 35 as of 4:01 p.m. in New York. The swoon came as stocks plunged, wiping out gains for the year in major indexes.

Record Surge in VIX Signals Market Bottom to Canaccord's Dwyer

As the S&P 500 extended its decline to more than 5 percent, voices calling for a bottom began getting louder. Earlier Monday, UBS strategist Keith Parker said the selloff is “close to an end” as the size of pullback has matched the average retreat during periods of positive economic surprises, as is the case now. Evercore ISI technical analyst Rich Ross also sees limited downside as volume spike signaled “climax” selling.

Another indicator tracked by Dwyer for signs of exhaustive selling is a dip in S&P 500 stocks trading above 10-day average. The readings recently fell to 6 percent, well below the 10 percent threshold he’s watching.

“We have now seen the ‘whoosh,’ and we would look for the ‘ramp”’, Dwyer wrote in a note to clients.

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