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Unfortunately I only have data back to 1995 on this setup.
Top is VXN, middle is NORMALIZED MACD which is a proxy
for VXN adjusted for average volatility over 104 weeks, and
bottom is SP cash.
Draw your own conclusions but mine say there ain't no screaming
crash coming.
There has typically been very low NormMACD values at minor
and major peaks and the NormMACD values here do not come
anywhere close to that phenomena.
Clyde
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Clyde Lee Chairman/CEO (Home of SwingMachine)
SYTECH Corporation email: clydelee@xxxxxxxxxxxx
7910 Westglen, Suite 105 Office: (713) 783-9540
Houston, TX 77063 Fax: (713) 783-1092
Details at: www.theswingmachine.com
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----- Original Message -----
From: "Dan Harels" <harelsdb@xxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Friday, January 23, 2004 12:24 AM
Subject: Re: [RT] VIX Low - Reprise
> 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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