VIX Poll comments

Did we get a VIX signal at or near the top?  Yes/No.  Tough crowd - 75% said NO.  I would have voted YES.  There is not necessarily a right or wrong answer.  If you said we needed 4 consecutive down days then the answer would have been NO. 

A couple of points:

• There is no time restrictions on how long it takes the VIX to move to an extreme down/up as I interpret it.  It could take several months or a few days.  Doesn't matter.  (It is my signal - I get to define the parameters).
• Normally 3 consecutive up/down days is enough to confirm a signal.  In case of mixed closes (for example DJIA and S&P500 up and NASDAQ down) I would like to see 4 consecutive days.

We did set an extreme low on February 8 from a high back in late August (time is not a factor).  Then we got 3 down days Feb 21-23 (confirmation).  That was the start of the sell down.... 

Take a look:

Now I know this is not your standard VIX signal interpretation, but it is my own version which I developed in 2007  (after several attempts at developing a reliable signal based on the VIX) and back tested over several years.  It will not always signal a trend change, but when it does it normally is worth paying attention. 

Now a trend change can be short (2-3 weeks) or long (several months).  So you want to use this with other tools as it may not always signal a trend change....  As I stated in a comment to a poster my cycle work leads me to believe this trend change will last into mid-April.  Given the pullback on the VIX we may get a setup for another signal soon (VIX below 16.25 is a key area to trigger the signal, then we would wait for confirmation).

Hope this helps i n your understanding of this and how I use it.