Keystone's SPX:VIX Ratio Indicator

The regular readership has seen the SPX:VIX ratio referenced here many times.  For elevated broad markets, the 68 level is monitored.  The bulls are in business as long as the ratio stays above 68. As soon as it drops under 68 the broad markets are in serious trouble.  The 93 level is very high for this ratio in fact, the last time we were at these nose bleed heights was at the market top for 2011 in late April. Note the failure that occurred on 3/6/12, the bears were throwing confetti, then, the next day the ratio popped back above 68 showing that the bulls wanted to stay in control so the bears returned to the den.

The reason the ratio is elevated is due to the low VIX. Since VIX is in the denominator of the ratio, a smaller denominator results in a higher ratio.  Thus, when the VIX spikes higher, as it should at anytime, the SPX:VIX can move downward very quickly to threaten that 68 level.  The ratio can be watched in real-time.  A failure of 68 will result in a large down day, typically a triple digit down day for the Dow Industrials.  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.