Thursday, August 4, 2011

Stage set for a trend change signal ($vix)

The VIX has now advanced over 97.5% from its low in late April.  That is the first requirement to get a trend change signal to "up".  The second requirement is to get 3 consecutive green days.  Now I have seen those green days come as soon as 3 days later.  On the other had I have seen it take weeks.  In late 2008 and early 2009 it took months to get a completed trend change signal (you would have avoided the complete meltdown) if you waited for the signal, because the prior signal in August of 2008 was a trend change down.

So it is time to be aware and watch for a trend change signal.  The trend change usually occurs  no more than 4-5 days after the signal  is completed and the 3 consecutive green days may even be part or the trend change.  Not every trend change will generate a signal, but when a signal happens it is almost 100% accurate. The signal does not predict the length of the change - it can be a few days to months.

See prior posts on this.

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