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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?


To: Sun Tzu who wrote (8772)2/25/2003 12:32:34 PM
From: Return to Sender  Read Replies (1) | Respond to of 95640
 
Over the course of the last couple of years a VIX print of over 50 has been a dependable indicator an oversold market due to high levels of fear. Market rallies have taken place in every instance after a market close VIX above 50.

For our purposes here I will use the VIX and the SOX as examples. If the VIX is rising strongly you can count on the SOX falling strongly as well. Run any time frame you like:

stockcharts.com|D|B14

The VIX reacts to the market but it is also predictive based on past extremes. If the VIX closes above 50 again I expect a rally off the bottom of no less than 25% for the SOX.

See here how the QQQ has rallied after a close of the VIX above 50:

investorshub.com

And here how AMAT and the SOX trade inversely to the VIX moves:

bigcharts.marketwatch.com

The VIX may not offer much predictive value between extremes but at extreme levels both high and low it does not just react .... it predicts.

RtS



To: Sun Tzu who wrote (8772)2/25/2003 1:56:13 PM
From: Gottfried  Read Replies (1) | Respond to of 95640
 
ST, there aren't any >look at rises in VIX when there was no market fall<

home.attbi.com

Gottfried



To: Sun Tzu who wrote (8772)2/25/2003 2:45:26 PM
From: SpecialK  Read Replies (2) | Respond to of 95640
 
Low levels of VIX (around 20 or under 20) are predictive of complacency in the market, and a probable topping phase. High levels are predictive of extreme behavior, and a probable reversal.

Of course, it helps to look at an average of VIX, not just the number. VIX can remain low for long periods of time (market rising), but when the average starts rising above 25-30, it can be used as a warning signal that markets will be choppy.