The VIX Volatility Index Monthly Signal

NYSE top down VIX MACD

VIX Monthly Signal

The following is a synopsis of a video produced by “The Goat” AKA GTO, also known as Ron Roll. In a nutshell, the monthly reference is made to VIX Volatility Index monthly together with MACD as a signal.

The 2011 MACD crossover looks similar to the current case. The signal came in January as MACD crossed. Hat tip to member Rob_A for the research.

VIX Extremes

We show the VIX monthly with a simple 50ma. The volatility index is still at extremes, but well off the February extreme when the Credit Suisse XIV collapsed. VelocityShares Daily Inverse VIX Short-Term exchange-traded note, more frequently cited by its ticker symbol XIV imploded the first week of February sending VIX into the green zone.

VIX Monthly

VIX MACD Signal

Look closely or plot your own chart and you will see MACD crossed in late December early January. Momentum is still bullish, with MACD above its signal line and passing through zero line in late February.

Fibonacci levels are shown using February 11, 2016, low pivot (1810.10) and January high pivot for eyeballing potential zones. Retracement levels yield 38.2% = 2469 and 50% = 2342.17 with a rounding error of course.

VIX MACD SPX

Stochastic RSI is used to combine the two signals. Ron felt stochastic was a useless indicator. I imagine this was due to its “bound” nature. Stochastic can only rise to 1 and fall to zero, which means it can stay at extreme levels for extended periods. In this case, StochRSI is embedded at 1.

VIX MACD RSI

For this and many other reasons, we began harvesting profits and reducing the number of open positions during the January run-up. This is another reason why we have taken very few new long swing positions and choose to swing for very short periods.

Until the market stabilizes, cash is your best resource. Hedges in bonds are working. SHY, IEF, AGG, TLT, UST and GOVT.

Happy Trading,

Vinny

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Vinny Gambini

Trade Fundamentals w/ Technical Analysis - CANSLIM method using high probability setups and Ichimoku Trend Analysis. Architect, Family Man and Father of three.