Technically the VIX could bounce over the next couple of days but since volatility has just about been removed from the markets…short of a selling onslaught tomorrow… the markets may well be in for further upside. My timing signal remains negative and all of my positions are still in profit, but we could see the signal flip as early as Fri/Mon.
I did sell out of my EWC position as it was obviously a bad move given the strength we saw in the metals today. A few others I added to my long watchlist today are DFS HMY MFN GRS.
The sharp drop in the market and then subsequent sharp rebound was accompanied by strong VIX movements in the opposite directions. Moving from a position where the VIX is stretched above the 10ma to one where it is stretched be low the 10ma in a short period of time is quite rare. It is something I last showed on the blog on 10/9/09. I have updated that study below. |
| Results over the first 2-3 days are somewhat sketchy, but once you get out beyond that they become more consistent and more powerful. Since it is commonly thought that VIX stretches below the 10ma of this magnitude suggest short-term bearish inclinations for the SPX, many people may find these results surprising. |
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