Allen,
Thanks for the very interesting $VXN chart.
I don't routinely follow either the $VIX or the $VXN, but found your $VXN chart fascinating. But I notice that at the March peak, it was only about 55 or so. Any thoughts as to why it was at a rather average value at a market extreme?
The use of Bollinger bands with the $VXN I found particularly interesting. The fascinating thing there is the typical behavior of the $VXN with respect to the midline and rails of the Bollinger bands. That is, like most stocks and indices, if the midline of the BB is downsloping, then the stock will trade predominantly in the lower half of the BB range, with the midline area acting as resistance. And a cross through the midline to the opposite rail has strong trend-reversal implications. You can see this playing out very well with $VXN, as well.
And along these lines, I see that the uptrend in $VXN has been broken with the recent cross over the midline to the opposite rail. My spin on this is that the now downtrending $VXN will continue to trade in the lower half of the BB, and that any penetration through the midline which reaches the upper rail will indicate another trend reversal, and that a trend reversal in $VXN will not occur until this happens. And, further, that the $VXN will continue to trend downward from here. Would you agree with this?
I wonder if it is noteworthy that the BB's themselves appear to be oscillating in sinusoidal fashion, and if so, then these bands are at the node, heading for the lower extreme, but quite a ways from there yet (about 3 months or so)......... this would imply an uptrending market for the next 2 or 3 months, at which time we should see a top, and subsequent downside reversal.....any thoughts?
Thanks,
Walkingshadow |
