Now Reading
VIX Buy Signal Triggered
101

VIX Buy Signal Triggered

VIX Buy Signal Triggered

by The MoleDecember 6, 2019

I have been posting here on Evil Speculator for over 11 years now but this is the first time I recall a VIX Buy Signal following a Sell Signal in such short succession. Can it be trusted? Did I miss the pre-Santa-Rally dip? Is it too late to load up on long positions? So many nagging questions but as usual the Market Mole’s got you covered:

Let’s start with realized volatility, also known as historical volatility. The two spikes on my slightly modded ATR (which shows moves in ticks/pips) show us exploding from < 20 tick hourly candles into 40+ tick candles. In the end we lost 85 handles on the SPX in two sessions.

What usually happens is that everyone’s stops get cleaned out and once a credible looking floor develops volatility begins to subside as buyers try their luck at catching the dips. From here they either get run over as the next selling phase sets in or a crucial buy threshold is breached which signals to everyone that the worst may be over.

What I like here the most is that RV seems to be dropping continuously (red arrows) but I would not automatically assume that we are now heading higher on auto-pilot.

Here’s the VIX, which of course expresses summary implied volatility courtesy of CBOE option prices. Those gaps you see are indeed signs that we may have been through a pre-holiday shake out. But there usually is at least one encore which tests the mettle of early buyers.

I mentioned the SPX:VIX ratio on Wednesday morning as it had been pointing down since Thursday evening and only had to begin to point up after the Tuesday gap down.

Unfortunately since then the SPX:VIX has been trailing the index again which does not give me a lot of confidence, at least at this very stage.

Nevertheless technically speaking we are now looking at a bonafide VIX Buy Signal. However it comes one week after a Sell Signal that was a long time in the making.

And then there’s the IVTS which yet has to give us confirmation…

evil_separator

It's not too late - learn how to consistently trade without worrying about the news, the clickbait, the daily drama and misinformation. If you are interested in becoming a subscriber then don't waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Please login or subscribe here to see the remainder of this post.

Sign up here to receive my FREE early morning briefing:

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.
Enjoyed this post? Consider a small donation to keep those evil deeds coming!

BTC: 1MwMJifeBU3YziDoLLu8S54Vg4cbnJxvpL
BCH: qqxflhnr0jcfj4nejw75klmpcsfsp68exukcr0a29e
ETH: 0x9D0824b9553346df7EFB6B76DBAd1E2763bE6Ef1
LTC: LUuoD6sDWgbqSgnpo5hceYPnTD9MAvxi6c
PayPal: https://paypal.me/evilspeculator