Loading ...Week of Reversals – VIX near a turning point
By my way of seeing things we are entering the week of a VIX futures turn. Its something to keep an eye on since it means bull trades in the S&P could be about to hit a rut in the road. Not a guarantee of course but watch for the gap to close on the daily chart and be prepared for action.
While the VIX is at extreme levels and at some point has to stop dropping, I am not sure it is going to work the way it has in the past. It has been reconfigured and because of other changes in the markets(Daily options & larger percentage of dark pool trading) while still worth monitoring, it isn’t likely to be the barometer it used to be.
Its working just fine CM. Same as always. Not sure what you mean but I look at it from mechanical technicals and don’t see any change. You are thinking of fundamentals I suspect. Rationalizations about Vix usage, market opinions, this versus that and stuff that can’t usually be measured without coloration added first along with heaping spoonfuls of opinion. Don’t get me wrong, I love that debate kind of stuff. But its not what works end of the day.
As I said it will go back up eventually and may look like it is working as in the past but it isn’t the signal that it used to be. Like most technical indicators(nothing I listed has anything to do with fundamentals) when everyone in the market becomes totally reliant on a specific technical indicator it loses most of it’s value as a leading indicator. Collectively, it still contributes to an overall picture but it’s value becomes diluted over time when everybody relies on it.
Honestly Chartsmaster I have no idea what you are talking about. If the VIX spikes from these lows then markets will be dropping. That is all you need to know. Don’t overthink it. Markets are currently reaching a reversal high and VIX is at a reversal low. Just imagine a set of scales. One goes up and the other down. That is the indicator. Its a confirmation of a pending stock correction.
If it doesn’t lead where is the value? I can look at the charts of the stock market falling(when it starts) the VIX used to be a barometer. It isn’t any longer. What you are saying is like the weatherman looking out the window and telling me it’s raining.
Let me just point out that I have furnished a chart to accompany my point. You have drawn exactly nothing and yet you keep criticizing me. Look at it again. This chart I provided shows something that the S&P is not showing. It shows price has hit bottom on a 12 months support line and then gapped up. So my indicator is chart specific and realtive to a key line. This is not some generalist blathering I am doing here.
Not criticizing. I tried to make the point in my first comments that while the VIX was a very good indicator in the past, because of the reasons I articulated, it doesn’t have the same value it once did. Once again history shows and technicians have long understood that when an indicator has become relied upon by everyone it loses some of it’s value. It has nothing to do with you or me, just a fact. Don’t take my word for it, observe and see going forward whether that is the case or not.