Keystone's SPX:VIX Ratio Indicator Triggers Crash Signal

One of Keystone's key turn signals is the SPX:VIX ratio.  When the ratio moves higher and crosses up and over 68 there is nothing but blue skies and marshmallow clouds above. A bullish orgy commences with nightly dancing on tabletops.  The bulls don lamp shades on their liquor-filled heads as the bullish party continues along without an end in sight.  The party does end, however, when the ratio falls and drops back under 68.  Today the party ended. In May, the last time the party ended, the SPX dropped from 1360 to 1280, an 80 handle drop. And this was after the drop from the market top that was over 1400.  The red square shows where the ratio dropped under 68 signaling oncoming trauma, but recovered, and the bull party lived on for another month.

So today the failure at 68 occurs.  This is a crash signal for Keystone but it does not cast in stone that a market crash will occur, it simply states that the equity markets are under serious stress and will continue significantly lower as long as the ratio stays under 68. The only way the bulls can stop the market drop is if they push the ratio back above 68 (the ratio moves up if the SPX moves up and/or if the VIX moves down). Otherwise, the markets can drop much lower, at which time the ratio will drop under 35, where the market rally signal can be discussed.  For now, the broad indexes are moving far lower--as long as the ratio stays under 68. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.