Friday, June 06, 2003
SPX Price relative to VIX
This SPX/VIX study came about because VIX wasn't on its own consistent enough to follow the 'VIX is low, time to go; VIX is high, time to buy' thing. I noticed a few things:
- SPX/VIX channels
- Significant channel shifts happen when price is trending up or down
- SPX/VIX reversals are good swing indicators, regardless od channel position
- 'Significant' tops & bottoms are accompanied by channel shifts.
- The direction of the 34d, 60d MA (Bollinger Band basis) needs to shift as well to make the SPX/VIX reversals significant
As to now (6/6/2003), SPX/VIX finally got out of the gutter channel and into the center turn lane. It hit the upper channel line & is reversing, perhaps a bit like Oct02 with the perhaps significant difference that the 34d MA is turning up and price tested and moved back up off the 60d MA.
I'd look for a strong move out of the center lane to confirm more up. Otherwise, it may repeat the Apr-Dec98 center channeling, which could bode well for a trading range.
If this pull back drags it back in the gutter channel, well, bummer! just another bear rally.
click image to open full-size chart in new window
At last, over the rim
of the waiting earth
the moon lifted with
slow majesty
till it swung clear of the horizon and rode off,
free of moorings
- Kenneth Grahame,
The Wind in the Willows
About
blather: nonsensical talk.
At times my analysis log, at times sharing what I've learned. Always my own work and views.
Credits
Content: amg
Basis: glish & bluerobot
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