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Absolute levels in the VIX are not necessarily indications of an impending
market decline or rise. It's more important to watch the relative levels.
As it happens, the VIX is telling me to expect continuing decline for now,
but three instances of the index under 20 doesn't permit a statistically
reliable conclusion.
----- Original Message -----
From: "Lionel Issen" <lissen@xxxxxxxxxxxxxx>
To: "Metastock@xxxxxxxxxxxxx" <metastock@xxxxxxxxxxxxx>
Cc: "Fasttrack@xxxxxxxxxxxxxx" <fasttrack@xxxxxxxxxxxxxx>
Sent: Sunday, March 24, 2002 7:20 AM
Subject: FW: [HoustonInvestors] "Market danger" by George Laigle
> FYI
> Lionel Issen
>
>
> -----Original Message-----
> From: kalyram [mailto:kalyraman@xxxxxxxxxxx]
> Sent: Sunday, March 24, 2002 7:16 AM
> To: HoustonInvestors@xxxxxxxxxxxxxxx
> Subject: [HoustonInvestors] "Market danger" by George Laigle
>
> The VIX has dropped below 20 on Friday. It has been that low only 3
> other times in the last 3 years. Please confirm this data for
> yourselves by calling up the VIX and SPY charts in Bigcharts. In late
> July of 1999, the VIX broke down thru 20, and the SPY dropped 12%
> over the next 3 months from 142 down to 125. In Dec. 1999, VIX
> dropped below 20, and SPY dropped from 148 to 134 over 2 months for
> decline of 9.5%. Ditto Sept. 2000- SPY dropped from 153 to 109 over
> next 7 months for decline of 29%. In late June 2000, VIX touched 20,
> but didn't go below, but SPY dropped 23% from 124 to 95, with Sept 11
> probably accounting for about 15 points, for total 3 mo. decline of
> 23%. Past is not always prologue, but those of you who are long
> should not ignore this indicator. Notice that except for the 9-11
> aberration, the declines have averaged between 4% to 4.5% per month,
> and no decline was shorter than 2 months. Pass it on.
>
> Regards,
> George Laigle
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