Volatility Trading Band

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The VIX also referred to as the "fear gauge" has just entered into a complacent or "risk on" extreme. Over the last 2 years the VIX has repeatedly found support between 12-14. When price is trading in this 2 point range and when the 9 period RSI falls below 40 it has proved to be a great entry point. Conversely, the 18-20 range has been a reasonable exit point in conjunction with an RSI (9) reading above 60. At current levels going long volatility or hedging long exposure may be a profitable course of action despite the record high close today for both the Dow and S&P. From current levels to resistance at 18 is a 28% advance. The question now becomes how long will it take?

Penafian

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