The "Fear Meter" breakout

Looking at the VIX (CBOE Volatility Index or "the fear index") you can see a breakout of what has seemed to be the endless decline. After having traded between a tight descending channel from February to August, we are finally seeing a descent break above resistance. This is a great confirmation sign that the rally has lost its steam and that the market is more likely to head down through the rest of September. This chart has a lot of room to run up until it meets with any type of resistance which could indicate a larger than expected sell off over the next month or two. I see short term resistance here at $32.50 but can easily see this climbing back to $37.50 or higher. Since the VIX is a measure of fear in the marketplace you do not necessarily need a major sell off in the indexes to push it higher, all that is needed is a fear that the market could go lower to spread among investors. I do not typically trade the VIX on a regular basis, but in situations like this it can make for an interesting trade.

 

Below are some more examples of the PrecisionCharts trading system and a comparison to the traditional buy and hold investment strategy.

Amerisoursebergen (ABC) 1 year

Buy and Hold               -3.6%
PrecisionCharts      +87.1%
 
 
 
 
 
 

 

 
 
 
 
 
 
 

Apple Inc. (AAPL) 1 year

Buy and Hold                -6.1%
PrecisionCharts       +77.5%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

U.S. Oil Fund ETF 5 year

Buy and Hold                -45.3%
PrecisionCharts       +167.2%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Click here to learn more about the PrecisionCharts trading system and how it can help you to make more profitable trades today!

Past performance is not a guarantee of future profits. Resulst shown do not include trading fees or commissions.





Posted 09-01-2009 1:01 PM by Spencer T. Coles
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