Keystone's SPX:VIX Ratio Indicator Signals Significant Market Top

The SPX:VIX ratio is a very useful forecasting tool.  Keystone uses the sub 35 level to indicate where the bearishness is too out of hand and tha once the ratio reverses and heads back up thru 35, it is all blue skies and sunshine for bulls.  Note that the 2010 and 2011 lows for othe year were identifed in the 20-30 range (green circles). Conversely, on the top side, when the ratio moves above 68 the markets are becoming too bullish.  Once the ratio then moves back under 68, that is typically in concert with a large market down day and signals extended bearishness moving forward.  The market tops in 2011 and 2012 are clearly identified by the red circles.  More specifically, the market tops for the year, in April 2011, and this year in April, are identified by the teal circles where prints of 92-ish and 96-ish occurred.

The SPX:VIX ratio is now at 95.38. Once a 97 handle prints, that locks in the negative divergence shown by the red lines for the indicators and a smack down will be on tap. This level and higher identifies broad market tops so it is obviously wise to maintain and bring on shorts as the action plays out. Keystone's SPX:VIX ratio is updated regularly on the Turn Signal page. 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.