Past VIX Spikes Analyzed from May 2011 to May 2013
I have published this before, but this shows more examples of how you analyze the market for "Smart Money Buyers" that you can rely on. First you have to wait for a spike up in VIX of at least 5 points, then you wait for a pullback of 75% of that VIX spike. Plot the movement from the price low to the level the market was when the 75% retracement level was touched.
Who buys when VIX is HIGH? Smart money. People with a lot of money to manage who need to buy when there are a lot of sellers. Major, long term buyers buy when VIX is high because that's when prices are low. That's how the market works. Why? I can explain, but first please thank TradingView for this amazing software which has allowed me to find this great piece of market information from analyzing the data that you can get here so easily and graph and manipulate to your heart's content.
What I have also found in this data is that at the end of 2012 VIX was rising while stock prices were grinding higher, which implies SMART, LONG TERM buyers had a TON of stock to buy and wanted to buy it aggressively. I marked that extremely bullish setup with a purple box.
The other boxes are marked in bright green so you can see the movement from the lowest low of the correction to the point where VIX had settled back 75% from its run-up.
The way to utilize this information depends on your investing time frame. If you are a trader, I can see that there are some low risk entry points on pullbacks to the 75% price level, which is the top of the green box. Long term investors can rest assured that they are riding the trend when prices are above the bottom of the green box.
More "history" of the 75% VIX retracement SUPPORT LEVEL to come in subsequent charts.
Cheers.
Tim
9:33PM Thursday 7/23/2015
Who buys when VIX is HIGH? Smart money. People with a lot of money to manage who need to buy when there are a lot of sellers. Major, long term buyers buy when VIX is high because that's when prices are low. That's how the market works. Why? I can explain, but first please thank TradingView for this amazing software which has allowed me to find this great piece of market information from analyzing the data that you can get here so easily and graph and manipulate to your heart's content.
What I have also found in this data is that at the end of 2012 VIX was rising while stock prices were grinding higher, which implies SMART, LONG TERM buyers had a TON of stock to buy and wanted to buy it aggressively. I marked that extremely bullish setup with a purple box.
The other boxes are marked in bright green so you can see the movement from the lowest low of the correction to the point where VIX had settled back 75% from its run-up.
The way to utilize this information depends on your investing time frame. If you are a trader, I can see that there are some low risk entry points on pullbacks to the 75% price level, which is the top of the green box. Long term investors can rest assured that they are riding the trend when prices are above the bottom of the green box.
More "history" of the 75% VIX retracement SUPPORT LEVEL to come in subsequent charts.
Cheers.
Tim
9:33PM Thursday 7/23/2015
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