Friday, April 03, 2009

VIX / VXN Crosses

OK, I know I said I was done with the VIXEN yesterday, but here's a little comparison of the Qs with the VXN and the IWM with the VIX.
You, of course, are welcome to insert whatever ETFs or stocks that you fancy, but what I'm trying to display here is the relative synchronization of the 2 VIXs.
I monitor the IWM in real time in conjunction with the Qs just to verify short term market momentum and I know from previous experience that, when the two charts diverge, it's safest to stand back from any new entries and to keep my finger close to the EXIT button.
This is another way of evaluating the relative alignment of the IWM and Qs signals.
Based on a quick look at the "firing order" of the crosses on 2 charts there doesn't appear to any advantage between the 2, although a more reasonable test would lookback over several hundred crosses to get a quantified number.
If you've got multiple monitors one use of this relationship would be to set up you screens similar to that above, using the concurrence of the crosses to confirm trade entries.
Or (assuming your platform has the capability) you can set up 3 or 4 or more of these charts with the same template to help confirm trade signals.


John Pingel said...

bzbtrader: I like your analysis on the VIX/VXN Crosses. Would be great to see you discussing it real time on and during the trading day.

bzbtrader said...

If you drop by the Market Rewind chat room, I'm normally there a few hours a day and I (and several others) call out the VIX/VXN crosses as they occur, along with pivot targets and crosses, NYAD tells and TICK action.