Measuring VIX with RSI gives effective signals for primary and intermediate S&P 500 (SPX) tops.
There are two factors to generate an SPX top signal.
1) Daily VIX breaking above its declining trendline.
2) Daily VIX – RSI breaking above its moving average line.
There’s a third factor in discovering primary SPX tops. Primary SPX tops usually occur with the daily SPX at a higher high and the daily VIX at a higher low. The most recent SPX primary top happened in January 2022. Note the VIX bottom in January was higher than the November 2021 bottom.
This phenomenon occurred at the SPX primary tops in 02/19/20, 09/21/18, and 01/26/18.
The factors to confirm a primary top are the same for intermediate degree tops.
There have been six top confirmation signals since January 2022.
They are as follows.
01/05/22
02/11/22
04/05/22
06/13/22
08/19/22
12/06/22
At the opening of the next trading day after a top signal is when to initiate SPX short trades.
The trade would be held until either the VIX exceeded 34.00 or the SPX is at a higher level than the short entry.
The VIX level to exit the short could be adjusted depending on recent VIX action, you want to find a general level in which VIX advances terminated.
The covering of SPX short trades would occur on the opening of the next trading day after VIX exceeded 34.00 or when the short trade is at a loss.
The six short exit signals with gain/loss are as follows.
01/24/22 gain 8%
02/24/22 gain 5%
05/02/22 gain 9%
06/16/22 gain 1%
09/28/22 gain 13%
12/13/22 loss -2%
Note the top signal on 06/13/22 came after a significant decline. The entry point on the next trading day was after a gap down. These two factors were warnings that the trade may not have been effective.
The trade after the 12/06/22 signal quickly became a loss.
Of the six signals since January 2022 – two were ineffective, a success ratio of 4/6 or 66%.
There are two factors to generate an SPX top signal.
1) Daily VIX breaking above its declining trendline.
2) Daily VIX – RSI breaking above its moving average line.
There’s a third factor in discovering primary SPX tops. Primary SPX tops usually occur with the daily SPX at a higher high and the daily VIX at a higher low. The most recent SPX primary top happened in January 2022. Note the VIX bottom in January was higher than the November 2021 bottom.
This phenomenon occurred at the SPX primary tops in 02/19/20, 09/21/18, and 01/26/18.
The factors to confirm a primary top are the same for intermediate degree tops.
There have been six top confirmation signals since January 2022.
They are as follows.
01/05/22
02/11/22
04/05/22
06/13/22
08/19/22
12/06/22
At the opening of the next trading day after a top signal is when to initiate SPX short trades.
The trade would be held until either the VIX exceeded 34.00 or the SPX is at a higher level than the short entry.
The VIX level to exit the short could be adjusted depending on recent VIX action, you want to find a general level in which VIX advances terminated.
The covering of SPX short trades would occur on the opening of the next trading day after VIX exceeded 34.00 or when the short trade is at a loss.
The six short exit signals with gain/loss are as follows.
01/24/22 gain 8%
02/24/22 gain 5%
05/02/22 gain 9%
06/16/22 gain 1%
09/28/22 gain 13%
12/13/22 loss -2%
Note the top signal on 06/13/22 came after a significant decline. The entry point on the next trading day was after a gap down. These two factors were warnings that the trade may not have been effective.
The trade after the 12/06/22 signal quickly became a loss.
Of the six signals since January 2022 – two were ineffective, a success ratio of 4/6 or 66%.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.