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Tuesday, July 17, 2012

VIX Update: July 17, 2012

Regular readers are well-acquainted with one of the tools we frequently use in forecasting VIX: the channels on its daily RSI chart.  On April 18, with VIX at 18.70, RSI channels helped me forecast a high of 27.13 [see: VIX at a Crossroads.]  VIX reached its yearly high of 27.73 on June 4.

Being able to accurately forecast VIX enabled us to capture most of the downside from 1422 to 1266, and most of the upside since.  On June 2 [see: Channeling VIX] I reiterated VIX's impending high and called for a reversal to 16.84.
An ideal .618 retracement of the difference between A and D indicates a downside of 16.84, realistic if stock market takes off again.
Earlier today, in addition to reaching this target we spelled out six weeks ago, we had an important development that strongly supports our latest equity forecast.





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