Keystone uses the 35 and 68 levels as triggers for turn signals (reference the Turn Signal page on this site). Since the August crash, the ratio has danced to and fro across the 35 line, providing various rally signals, but, as a result of the recent broad market rally, the ratio has now punched above 68. This signals an alert to expect a market pull back coming.
As long as the ratio continues higher, or at least stays above 68, the market bulls are fine. If the ratio loses the 68 level, since it has now closed above,
the markets typically sell off strongly with a triple digit down move in the Dow Industrials common.
Thus,
watch the SPX:VIX ratio in real-time today and if you see it
drop under 68 the markets should experience a strong sell off, otherwise, the bulls are fine. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.
Note Added 1/23/12 at 9:35 AM: The ratio is now printing 68.68 so the bulls are happy as the day begins. Bears need to push 0.68 lower to start a market sell-off, otherwise, bulls rule.
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