Justa,
>>>> I might be concerned with this point as it sounds reasonable. BUT one should note that during the April 4th bottom, the SOX not only lagged by a few days, but it also retested its lows on April 9th whereas the COMP did not. The COMP gapped up and did not look back. The COMP lead that rally; the SOX followed. So it is reasonable to think then that the SOX must participate but does not have to lead the initial up. <<<<
Thanks for pointing that out about the SOX. Granted that the SOX doesnt always need to lead, but as we both agree, the SOX eventually needs to kick in for a rally in the NAZ/NDX to have legs.
>>>> I don't view a VIX at the 40 level as a sell signal at this point. We are close to the VIX levels at the April highs. Still a good deal of fear here. Looking at the 1998 initial low of August 31st and then the retest of mid October 1998, the sell signal on the VIX was 30 and change which corresponded with the high in the interlude rally before the retest. During that interlude rally, the VIX jumped around in random fashion <<<<
I apply my short-term technicals to the VIX, and it has actually been a very statististically reliable indicator for the overall market, and at times even more reliable than the individual indices. I have seen in the past, where my short-term technicals on the indices do not get to the extreme levels of a CLASS 1 SIGNAL, whether its a buy or sell, while my readings on the VIX are at the extreme of a CLASS 1 signal. Its a flip of a coin(about 50:50) that the indices turn before they ring a CLASS 1 SIGNAL, so in about half of those situations the CLASS 1 SIGNAL in the VIX actually lead the market. Having said that and as mentioned previously, of those instances where the VIX readings led the indices, a few of those moves were only a small oscillation in the opposite direction of the immediate move/short-term trend.
I prefer not to use absolute values when viewing the VIX, since I normally look for the short-term swings. |
