Keystone's SPX:VIX Ratio Indicator

The last time this signal was pertinent was to begin the year, when the rug was pulled out from under the market bears. This indicator is regularly updated on the Short-Term Market Signals page. After price moves above the 68 level, and then moves back below, that triggers a crash signal where a drop in the Dow from 200 to 300 points, like today, is expected right away or within one days time, and an extended period of bearishness is to follow thereafter (weeks and months). The broad indexes were falling through this critical 68 level at New Year's when the politicians agreed on the fiscal cliff resolution and the markets launched vertically, cheating the bears. The SPX:VIX leaped from below 68 to 100 in a heartbeat.

The May sell off last year was the real McCoy, the SPX fell through the 68 level in mid-May and carnage followed. The markets bottomed in June, then recovered, and by mid-June, the upside party was in place again. The September-October top rolled over which led to the late December failure when the politicians stepped in to save the markets with the fiscal cliff save. Today shows 89 so the chart must be watched here on out. When 68 fails, the broad indexes will drop strongly, the Dow will fall between 100 and 300 points, and continued market bearishness will proceed for weeks as long as the SPX:VIX stays under 68. The bulls will of course try to keep the ratio above 68 so they can continue with the Fed-fueled booze party. 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.