Stage set for a trend change signal ($vix)

The VIX has now advanced over 97.5% from its low in late April.  That is the first requirement to get a trend change signal to "up".  The second requirement is to get 3 consecutive green days.  Now I have seen those green days come as soon as 3 days later.  On the other had I have seen it take weeks.  In late 2008 and early 2009 it took months to get a completed trend change signal (you would have avoided the complete meltdown) if you waited for the signal, because the prior signal in August of 2008 was a trend change down.

So it is time to be aware and watch for a trend change signal.  The trend change usually occurs  no more than 4-5 days after the signal  is completed and the 3 consecutive green days may even be part or the trend change.  Not every trend change will generate a signal, but when a signal happens it is almost 100% accurate. The signal does not predict the length of the change - it can be a few days to months.

See prior posts on this.

VIX Poll comments

Did we get a VIX signal at or near the top?  Yes/No.  Tough crowd - 75% said NO.  I would have voted YES.  There is not necessarily a right or wrong answer.  If you said we needed 4 consecutive down days then the answer would have been NO. 

A couple of points:

• There is no time restrictions on how long it takes the VIX to move to an extreme down/up as I interpret it.  It could take several months or a few days.  Doesn't matter.  (It is my signal - I get to define the parameters).
• Normally 3 consecutive up/down days is enough to confirm a signal.  In case of mixed closes (for example DJIA and S&P500 up and NASDAQ down) I would like to see 4 consecutive days.

We did set an extreme low on February 8 from a high back in late August (time is not a factor).  Then we got 3 down days Feb 21-23 (confirmation).  That was the start of the sell down.... 

Take a look:

Now I know this is not your standard VIX signal interpretation, but it is my own version which I developed in 2007  (after several attempts at developing a reliable signal based on the VIX) and back tested over several years.  It will not always signal a trend change, but when it does it normally is worth paying attention. 

Now a trend change can be short (2-3 weeks) or long (several months).  So you want to use this with other tools as it may not always signal a trend change....  As I stated in a comment to a poster my cycle work leads me to believe this trend change will last into mid-April.  Given the pullback on the VIX we may get a setup for another signal soon (VIX below 16.25 is a key area to trigger the signal, then we would wait for confirmation).

Hope this helps i n your understanding of this and how I use it.