Failed VIX Sell Signal

I’ve had a pretty busy afternoon and wanted to post this earlier – but better late than never. I wanted to make sure that everyone understands that the prospective VIX buy signal I was looking at failed today:

Let’s once more look at the rules. For a $VIX confirmed signal you need 3 things:

1. a close outside of the 2.0 Bollinger Band (20 day, SMA)
2. a close back inside the 2.0 Bollinger Band – this issues the signal
3. a higher close (sell) or lower close (buy) than the close of the day back inside the 2.0 Bollinger Band – this confirms the signal.

Once you get those 3 things a major reversal usually occurs within the next week.

Okay, so we got step 1 – we got step 2 – but we did not get step 3. Which means this VIX sell signal failed and we should not expect a market correction any time soon. It’s possible that we simply keep sliding down that lower 2.0 Bollinger as we have been doing in the past two months.

Now, I know what your next question is right now. How about this current signal? What if we get a close above yesterday’s reading? Not good enough – sorry guys. What we need to see is once more the entire sequence above – starting with a brand new close outside the 2.0 Bollinger.

Better luck next time – sorry guys.

Cheers,

Mole