Wednesday, March 11, 2015

VIX and Bollinger Bands Today

Click on Chart of VIX to Enlarge

This chart of the VIX shows that relative to the recent range the VIX is elevated as evidenced by the shorter term bollinger band being outside of the upper longer term band.  Additionally, the VIX has touched and closed outside of this longer term upper band.

Now this is an hourly chart, so it needs to be viewed as a shorter term signal.  However, notice the red circles at prior dates and compare to your charts for reference.  It warns us that this move down may have an upside reaction soon.  For the very short term trader who is short indexes, I would suggest that a trailing stop of some sort be used in the market given the current configuration.

Another point of note is that the VIX is somewhat lower than the previous signals, so it is not really that extreme and could certainly see upside continuation which would occur with stock declines.

I am making no position changes today, but will assess my trading indicators after the close.


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