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Strategies & Market Trends : Ask DrBob
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To: Louis V. Lambrecht who wrote (265)8/19/2000 4:40:20 PM
From: theniteowl   of 100058
 
Thanks to all for the VIX info and it would appear
that a low VIX reading should be viewed as a cautionary sign and there should be confirmation from other indicators. Of course as Louis pointed out the 'rules' change from time to time and maybe the VIX is loosing some of its significance to the QIX.

From a January article on stockcharts.

"I view the VIX as a trader sentiment gauge. When the VIX is at an extreme high or low relative to recent trading history, I view that extreme movement as an indication of an extreme swing in the emotions of a group of traders. The buy and sell lines on the VIX chart above are not fixed. They may have to be shifted as overall market conditions change.
...The VIX is not foolproof or totally reliable -- that's the case with any technical indicator. You must use this indicator in conjunction with other technical indicators and studies to make a reasoned judgement about the VIX buy and sell signals.
...My judgement of what the daily VIX is saying and what the weekly Russell 2000/CCI is saying is that the VIX gave me a short-term sell signal, but there is likely yet to be some more upside action in this stock market before it turns bearish.

stockcharts.com

Using the same information from the article here is an updated chart showing that there may be some upside left, also note that using this as a signal would have triggered a sale in the second half of March, not bad but will it work again?

stockcharts.com[L,A]WDCLYYMY[DF][P][VC60][ILD21]

The chart that Bobber linked also shows that the low VIX readings of late have given an early signal so using some caution now seems to be in order.

On the same note it was mentioned on the Stock Attack thread (think it was Donald Sew) a possible falling wedge on the VIX, implying an upward movement in this indicator (when??) and supporting what was written by Paul Cherney.

I posted a chart on the Yahoo stocktimers board, FWIW.
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