Friday was a mixed day - only the DOW was down I believe. So we now have 3 down days in a row on the DOW. I suppose this could be taken as a confirmation of a VIX trend change signal. I prefer 3 days with the major indexes (DOW, S&P, NAZ) all down as a confirmation - but would not argue if you said it was a confirmation.
Original post:
If you look at a Bell curve 2 standard deviations from the center covers 95% of the population. Now if we apply that to the VIX a move up in the VIX of 95% from a bottom or down 47.5% from a top should indicate an extreme move. The VIX has now moved down over 47.5% from its high around 48 - so we suspect a high is near (or may have already been reached).
To be on the safe side though we would like confirmation to call a trend change. Back testing shows that if we get 3 red days in a row that this provides confirmation of a trend change to down. So we are waiting that to confirm a VIX trend change signal.
Confused? Reference prior posts on this topic.
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