VIX Signals Take Patience

The VIX signaled that market participants were way too complacent about the bull market well ahead of the correction.  This made sense because the complacency reading came hand in hand with ‘dumb money’ sentiment way over bullish.

vix.spx

VIX & SPX daily, from NFTRH 264

In this case the signal took patience that I for one did not have.  If one had just noted the hysterical highs in bullish sentiment and the flat lined VIX at support, one might have simply bought call options on the VIX and paid no attention to them until they paid off.  That is what one might have done, but psychology is such a prominent aspect of the markets for we humans.  It is harder to do than it sounds.

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