Hi Rick:
Extremes are always a problem. Because, as you rightly suggest, they can become more extreme, and often do. So they gain reputations as "knives" which folks try to catch, often with bloody consequences.
The nature of bottoms and tops make them inherently unsafe, for me, to trade. I never do very well on bottoms and tops. When you call them, they are great ego boosters. But they rarely cough up much in the way of profits.
I have not answered your question yet, I know. Let me try. VIX, put/calls, trin, sentiment ... all TA is useful, whether you designate it as a signal, a filter or a hint for trading. Everything can count, as far as I am concerned. Anything is worth looking at. But, to me, analytical overload can also freeze the finger. You wait for too much to be just right.
The purpose of any system, after all, is to get a trader comfortable enough to pull the trigger with calculated fear (or greed, or hope, or whatever gets you going).
Just as the purpose of money management is to get you to instantly distrust a trade once it is accepted, and to manage it for profit (with stops, etc.).
So ... long-winded answer (forgive me) ... but, yeah, put/call , vix, sentiment from advisors ... at extremes they can be valid bottom filters (not signals ... at least not for me, but if it works for you ... go with it).
But, as I say, I am not very good at making money at bottoms or tops, because my discipline with trends (I never go against them) keeps me on the sidelines, waiting for the safer money that always exists between extremes.
Best regards,
Temple |
