Here’s a continuation of last week’s Volatility Rotator concept with a first look at the FREE real time template setup available at www.freestockcharts.com. The shaded area is the VIX while the overlying volatility line charts include QQV (Qs), OVX (Oil), EVZ (Euro), GVZ (Gold) and VXX (VIX ETN). There are several alternate permutations of a basic relative volatility model . . this one is pure volatility without any forecasting metrics.
How do we use this thing? A number of possibilities should jump to mind and a few tracking metrics that will be added to the template tomorrow may make some of those more apparent. One strategy that has worked well this year has been using this template to assess relative volatility while at the same time tracking a model of comparable sector ETFs that can actually be traded and metrically quantified.
Essentially a visual tool the VIX-0-meter provides a fractal snapshot of broad market conditions at at glance. In this case the chart displays 3 day bars but daily and intraday bar models provide a much more dynamic view of relative sector momentum as seen through the lens of volatility. A useful second set of eyes, IMHO, regardless of your preferred trading time frame.
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