VIX, SPY: Bollinger Bands
PikerTrader | Mar 27, 2015 06:32AM ET
Below is a chart that shows a nice correlation between the price action of VIX and SPY. What the chart shows is that typically when the VIX moves towards the upper level of its Bollinger® Band it marks a low in the market and a bouncing point. It is same on the opposite side of the Bollinger Band, so when VIX touches the bottom of its BB, this marks a top in the market. VIX touched the touch of its BB yesterday but SPY did not. This pattern usually jump starts when both hit the BB and the VIX will typically hover around its BB for 2 – 4 candles. For SPY to hit its BB it would need to get to 203.38, which is right around the March lows. This correlation and our Piker Signals being oversold are giving a good sign that if the March lows hold we could see a rally.
Here is a short-term view of the VIX and BB
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