*last updated October 7, 2018
Traders commonly assume that VIX will spike if it is “very low”. This isn’t true.
- How “low” is low? Does VIX have to be at 12? 11? 10?
- VIX can remain “low” for a while before spiking.
Our VIX Spike Model normalizes VIX. When our VIX Spike Model falls below 0.07, VIX will likely make a spike in the near future.
Many traders believe that VIX will spike in the near future if VIX’s current reading is “low”. This is not true. VIX can remain “low” for a long time. Our VIX Spike Model is based on the concept that VIX will spike when it moves within a very narrow range.
- Readings >0.25 = short term bearish for VIX (top in VIX)
- Readings <0.06 = short term bullish for VIX (bottom in VIX)
*This indicator is updated once a week.
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