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For about 5 years up until last fall the 19ish
level acted as a floor on VIX and was a very useful tool. But since then
that floor has become a ceiling, and looking back further on
weekly/monthly charts creates an even murkier picture of what VIX is "saying"
along with its current usefulness.
----- Original Message -----
From: "Dan Harels" <<A
href=""><FONT face=Verdana
size=2>harelsdb@xxxxxxxxxxx<FONT face=Verdana
size=2>>
To: <<A
href=""><FONT face=Verdana
size=2>realtraders@xxxxxxxxxxxxxxx<FONT face=Verdana
size=2>>
Sent: Friday, January 23, 2004 12:24
AM
Subject: Re: [RT] VIX Low -
Reprise
<FONT face=Verdana
size=2>> I mis-stated Larry Connors' interpretation of the VIX in a previous
post. > Perhaps I should pay closer attention to my
schooling. A portion of a > recent column by Mr. Connors on the
Tradingmarkets web site is excerpted > below. I mention the web
site only to give proper credit.> > Dan> > "And,
another time to not to be buying stocks is when the VIX ($VIX.X) (CBOE >
Volatility Index) is trading 5% or more under its 10-period simple moving
> average. Why? Because had you bought the S&P 500 every time the VIX
was 5% > or more below its 10-day SMA, and exited a week later over the
past 18 > years, you would not have made money! The market has risen
431.59% during > this time and yet none of this gain (net) has occurred
when the VIX was 5% > below its 10 day-sma. Unreal, isn't
it?............Being 5% below its 10-day > ma doesn't mean the market has
to reverse. The rally can and many times will > continue. We just know
that over the past 18 years, on a net basis, it's > been dead zone with
no edge....The point of this week's lesson is to discuss > why you should
not be buying overbought markets. There are many ways to > measure an
overbought market, but in my opinion, the 5% VIX Rule is among > the
best."> >
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