VIX Confirmation...not yet

As I mentioned in the last post, the VIX model has not confirmed a bear market yet with the chart shown here being the confirmation signal; the ratio of the Nasdaq 100 to the VIX smoothed using the 21 and 65 week EMAs. When combined with the ultimate oscillator shown below the ratio, especially when it is registering a reading higher than 75 or lower than 25, one can see when the ratio of the two moving averages begins to peak/trough and revert to the mean.

At the moment, there is a warning sign that a bear market is developing within the model but nothing has been confirmed yet as the 21 has not crossed the 65. Thus net net, this overall model, when combined with the previous VIX chart, this combination would be neutral. In terms of the outlook for this model, given the extreme reading at the end of March, this argues that the next move is a bear market signal. At the same time, if the two moving averages converge and then the 21 bounces back upward, the signal would be taken out of play.

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