Well, I guess a Vix double spike is a Vix double spike. Its still not a good reading for a confirmed bottom in the medium term, but it turns out to be an EXCELLENT spot to cover shorts and get long, at least for a wicked day trade. That’s exactly what I did at Dow -270…
Covered all shorts (note, I re-entered some of them at Dow +240) and shorted FXP (sold EEV too. phew). Anyone there with me? Congrats!!
Anyway, here’s the chart I posted, just minutes before the market decided to rally a few hundred points intraday. It was a bold call to make while the Dow was trading almost -300 points. But it at least illustrates how effective the Vix has been lately.
Think of the Vix as an alarm clock. Note though that this was a weak alarm, but my instincts took over and decided to agree with it. Normally I would like to see at least 12%-15% spike. However, the 18% jump from 58 to 70 in 3 days was “significant enough” to force me to make the trade. If you’re having trouble reading the Vix, or want an alternative way to use it, then check out Danny’s tab for his LoBV indicator which measures short term changes in trends. It is very similar to how I read the Vix.
Aloha!
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Where we at when it goes from 70 to 58 in the course of about 3 hours like it did today? See any follow through to the upside or are we looking at a slump tomorrow AM? I’m thinking some backing and filling tomorrow morning.
Retail sales numbers come out tomorrow along with inventories later, could be another seesaw.
Let’s count the 64-58 as the first spike. You would be crazy to not sell some longs into this rally. Also, given the move down on the Vix today, I went ahead and shorted more stocks. I hate to be flipping trades this quick.
I think this rally went up +300 more points then it should have. therefore, I’m not counting on a follow through rally tomorrow. If we do opened gapped up, then day trade short and fade the gap.
there are some quality longs out there though… AFAM, FSYS, and QSII are among my top picks.
I think your spot on Gio…you have cleared some questions I have had about the vix…thanx
I was palnning on a gap up tomorrow and to use it to book profits…I was snooping around long down 200 today…
The Tick went nuts yesterday as well. Maybe all time lows (-1900?)
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