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Failed VIX Sell Signal
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Failed VIX Sell Signal

Failed VIX Sell Signal

by The MoleApril 14, 2010

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

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About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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